Tableof Contents

 

 

 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549**

 

**Form 10-Q**

 
| **x** | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT of 1934** |
|-------|--------------------------------------------------------------------------------------------------------|

 

**Forthe quarterly period ended March 31, 2009**

 
| **o** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT of 1934** |
|-------|---------------------------------------------------------------------------------------------------------|

 

**For the transition period from           to           **

 

**Commission File Number 000-30833**

 

**BRUKER CORPORATION**

(Exact name ofregistrant as specified in its charter)

 

| **Delaware**                                                    | ** ** | **04-3110160**                        |
|-----------------------------------------------------------------|------------|---------------------------------------|
| (State or other jurisdiction of  incorporation or organization) |       | (I.R.S. Employer  Identification No.) |

 

**40 Manning Road, Billerica, MA 01821**(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including areacode:**(978) 663-3660**

 

Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.  Yes x     No o

 

Indicateby check mark whether the registrant has submitted electronically and posted onits corporate Web site, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T during thepreceding 12 months (or for such shorter period that the registrant was requiredto submit and post such files). Yes o     No o

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer or a smaller reporting company. Seethe definitions of “accelerated filer, large accelerated filer, smallerreporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

| Large accelerated filer o                |   | Accelerated filer x         |
|-----------------------------------------------|--------|----------------------------------|
|                                          |   |                             |
| Non-accelerated filer o                  |   | Smaller reporting company o |
| (Do not check if a smaller reporting company) |   |                             |

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act).  Yes o    No x

 

Indicatethe number of shares outstanding of each of the issuer’s classes of commonstock, as of the latest practicable date.

 
| **Class**                                | ** ** | **Outstanding at May 4, 2009** |
|------------------------------------------|------------|-------------------------------------|
| Common Stock,  $0.01 par value per share |       | 164,068,214  shares                 |

 

 

 

----

Table of Contents

 

**BRUKER CORPORATION**

 

**Quarterly Report on Form 10-Q**

**Forthe Quarter Ended March 31, 2009**

 

**Index**

 
| ** **       | ** **                                                                                                          | **Page** |
|------------------|---------------------------------------------------------------------------------------------------------------------|----------|
| **Part I**  | **FINANCIAL INFORMATION**                                                                                           | 1        |
| Item 1:          | Unaudited Condensed  Consolidated Financial Statements                                                              | 1        |
|             | Unaudited  Condensed Consolidated Balance Sheets as of March 31, 2009 and  December 31, 2008              | 1        |
|             | Unaudited  Condensed Consolidated Statements of Operations for the three months ended  March 31, 2009 and 2008 | 2        |
|             | Unaudited  Condensed Consolidated Statements of Cash Flows for the three months ended  March 31, 2009 and 2008 | 3        |
|             | Notes to Unaudited Condensed Consolidated Financial  Statements                                                     | 4        |
| Item 2:          | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                         | 20       |
| Item 3:          | Quantitative  and Qualitative Disclosures About Market Risk                                                         | 32       |
| Item 4:          | Controls and Procedures                                                                                             | 33       |
| **Part II** | **OTHER INFORMATION**                                                                                               | 34       |
| Item 1:          | Legal Proceedings                                                                                                   | 34       |
| Item 1A:         | Risk Factors                                                                                                        | 34       |
| Item 2:          | Unregistered  Sales of Equity Securities and Use of Proceeds                                                        | 34       |
| Item 3:          | Defaults Upon  Senior Securities                                                                                    | 34       |
| Item 4:          | Submission  of Matters to a Vote of Security Holders                                                                | 34       |
| Item 5:          | Other Information                                                                                                   | 35       |
| Item 6:          | Exhibits                                                                                                            | 35       |
|             | Signatures                                                                                                          | 36       |

 

----

Tableof Contents

 

**PART I                         FINANCIALINFORMATION**

** **

**ITEM 1.                        UNAUDITEDCONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 

**BRUKER CORPORATION**

**UNAUDITED CONDENSED CONSOLIDATEDBALANCE SHEETS**

**(inmillions, except share data)**

** **
| ** **                                                                                                                                                                                                            | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                                                            | ** ** | **2009**           | ** ** | **2008**              | ** ** |
| **ASSETS**                                                                                                                                                                                                            |       |               |       |                  |       |
| Current assets:                                                                                                                                                                                                       |       |               |       |                  |       |
| Cash and cash  equivalents                                                                                                                                                                                            |       | $                  | 148.4      |                  | $          | 166.2 |   |
| Restricted cash                                                                                                                                                                                                       |       | 1.5                |       | 1.5                   |       |
| Accounts  receivable, net                                                                                                                                                                                             |       | 142.9              |       | 171.9                 |       |
| Inventories                                                                                                                                                                                                           |       | 420.4              |       | 425.1                 |       |
| Other current  assets                                                                                                                                                                                                 |       | 61.1               |       | 56.0                  |       |
| Total current  assets                                                                                                                                                                                                 |       | 774.3              |       | 820.7                 |       |
|                                                                                                                                                                                                                  |       |               |       |                  |       |
| Property, plant  and equipment, net                                                                                                                                                                                   |       | 208.6              |       | 221.3                 |       |
| Intangibles and  other long-term assets                                                                                                                                                                               |       | 76.2               |       | 74.3                  |       |
| Total assets                                                                                                                                                                                                          |       | $                  | 1,059.1    |                  | $          | 1,116.3 |   |
|                                                                                                                                                                                                                  |       |               |       |                  |       |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**                                                                                                                                                                         |       |               |       |                  |       |
| Current  liabilities:                                                                                                                                                                                                 |       |               |       |                  |       |
| Short-term  borrowings                                                                                                                                                                                                |       | $                  | 6.0        |                  | $          | 22.7 |   |
| Current portion  of long-term debt                                                                                                                                                                                    |       | 24.9               |       | 18.3                  |       |
| Accounts payable                                                                                                                                                                                                      |       | 47.5               |       | 43.3                  |       |
| Customer advances                                                                                                                                                                                                     |       | 197.7              |       | 199.6                 |       |
| Other current  liabilities                                                                                                                                                                                            |       | 215.8              |       | 235.8                 |       |
| Total current  liabilities                                                                                                                                                                                            |       | 491.9              |       | 519.7                 |       |
|                                                                                                                                                                                                                  |       |               |       |                  |       |
| Long-term debt                                                                                                                                                                                                        |       | 172.7              |       | 182.8                 |       |
| Other long-term  liabilities                                                                                                                                                                                          |       | 96.7               |       | 101.1                 |       |
| Commitments and  contingencies (Note 17)                                                                                                                                                                              |       |               |       |                  |       |
|                                                                                                                                                                                                                  |       |               |       |                  |       |
| Shareholders’  equity:                                                                                                                                                                                           |       |               |       |                  |       |
| Preferred stock,  $0.01 par value 5,000,000 shares authorized, none issued or outstanding at  March 31, 2009 and December 31, 2008                                                                          |       | —             |       | —                |       |
| Common stock,  $0.01 par value 260,000,000 shares authorized, 164,081,246 and 164,078,721  shares issued and 164,067,647 and 164,068,252 outstanding at March 31,  2009 and December 31, 2008, respectively |       | 1.6                |       | 1.6                   |       |
| Treasury stock  at cost, 13,599 and 10,469 at March 31, 2009 and December 31, 2008,  respectively                                                                                                           |       | (0.1               | )          | (0.1                  | )          |
| Other  shareholders’ equity                                                                                                                                                                                      |       | 295.5              |       | 310.4                 |       |
| Total  shareholders’ equity of Bruker Corporation                                                                                                                                                                |       | 297.0              |       | 311.9                 |       |
| Noncontrolling  interest in subsidiaries                                                                                                                                                                              |       | 0.8                |       | 0.8                   |       |
| Total  shareholders’ equity                                                                                                                                                                                      |       | 297.8              |       | 312.7                 |       |
| Total  liabilities and shareholders’ equity                                                                                                                                                                      |       | $                  | 1,059.1    |                  | $          | 1,116.3 |   |

 

*The accompanying notes are an integral part ofthese statements.*

 

1

----

Table of Contents

 

**BRUKER CORPORATION**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTSOF OPERATIONS**

**(inmillions, except per share data)**

** **
| ** **                                                                                               | ** ** | **Three Months Ended** | ** ** |
|----------------------------------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                                               | ** ** | **March 31,**     | ** ** |
| ** **                                                                                               | ** ** | **2009**               | ** ** | **2008** | ** ** |
| Product revenue                                                                                          |       | $                      | 202.2      |   | $ | 208.3 |   |
| Service revenue                                                                                          |       | 26.9                   |       | 28.7 |   |
| Other revenue                                                                                            |       | 1.4                    |       | 1.3 |   |
| Total revenue                                                                                            |       | 230.5                  |       | 238.3 |   |
|                                                                                                     |       |                   |       |   |   |
| Cost of product  revenue                                                                                 |       | 111.7                  |       | 105.2 |   |
| Cost of service  revenue                                                                                 |       | 16.1                   |       | 19.1 |   |
| Total cost of  revenue                                                                                   |       | 127.8                  |       | 124.3 |   |
| Gross profit                                                                                             |       | 102.7                  |       | 114.0 |   |
|                                                                                                     |       |                   |       |   |   |
| Operating  expenses:                                                                                     |       |                   |       |   |   |
| Sales and  marketing                                                                                     |       | 42.6                   |       | 44.4 |   |
| General and  administrative                                                                              |       | 16.7                   |       | 16.8 |   |
| Research and development                                                                                 |       | 29.1                   |       | 31.2 |   |
| Acquisition-related  charges                                                                             |       | —                 |       | 5.8 |   |
| Total operating  expenses                                                                                |       | 88.4                   |       | 98.2 |   |
| Operating income                                                                                         |       | 14.3                   |       | 15.8 |   |
|                                                                                                     |       |                   |       |   |   |
| Interest and  other income (expense), net                                                                |       | 0.1                    |       | (12.2 | ) |
| Income before  income tax provision and noncontrolling interest in consolidated subsidiaries             |       | 14.4                   |       | 3.6 |   |
| Income tax  provision                                                                                    |       | 5.8                    |       | 4.2 |   |
| Consolidated net  income (loss)                                                                          |       | 8.6                    |       | (0.6 | ) |
| Less: net income  attributable to noncontrolling interests                                               |       | 0.2                    |       | 0.2 |   |
| Net income  (loss) attributable to Bruker Corporation                                                    |       | $                      | 8.4        |   | $ | (0.8 | ) |
|                                                                                                     |       |                   |       |   |   |
| Net income  (loss) per common share attributable to Bruker Corporation shareholders -  basic and diluted |       | $                      | 0.05       |   | $ | (0.00 | ) |
|                                                                                                     |       |                   |       |   |   |
| Weighted average  common shares outstanding:                                                             |       |                   |       |   |   |
| Basic                                                                                                    |       | 163.3                  |       | 162.3 |   |
| Diluted                                                                                                  |       | 164.3                  |       | 162.3 |   |

 

*The accompanying notes are an integral part ofthese statements.*

 

2

----

Table of Contents

 

**BRUKER CORPORATION**

**UNAUDITED CONDENSED CONSOLIDATEDSTATEMENTS OF CASH FLOWS**

**(inmillions, except per share data)**

 
| ** **                                                                           | ** ** | **Three Months Ended** | ** ** |
|--------------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                           | ** ** | **March 31,**     | ** ** |
| ** **                                                                           | ** ** | **2009**               | ** ** | **2008** | ** ** |
| Cash flows from  operating activities:                                               |       |                   |       |   |   |
| Consolidated net  income (loss)                                                      |       | $                      | 8.6        |   | $ | (0.6 | ) |
| Adjustments to  reconcile net income (loss) to cash flows from operating activities: |       |                   |       |   |   |
| Depreciation and  amortization                                                       |       | 6.8                    |       | 7.4 |   |
| Stock-based  compensation                                                            |       | 1.8                    |       | 0.7 |   |
| Other non-cash  expense                                                              |       | (3.6                   | )          | (7.7 | ) |
| Changes in  operating assets and liabilities:                                        |       |                   |       |   |   |
| Accounts  receivable                                                                 |       | 20.6                   |       | 16.5 |   |
| Inventories                                                                          |       | (16.9                  | )          | (25.4 | ) |
| Accounts payable                                                                     |       | 6.6                    |       | 15.3 |   |
| Customer  advances                                                                   |       | 5.9                    |       | 27.8 |   |
| Other changes in  operating assets and liabilities, net                              |       | (16.7                  | )          | (11.7 | ) |
| Net cash  provided by operating activities                                           |       | 13.1                   |       | 22.3 |   |
|                                                                                 |       |                   |       |   |   |
| Cash flows from  investing activities:                                               |       |                   |       |   |   |
| Purchases of  property, plant and equipment                                          |       | (3.9                   | )          | (13.4 | ) |
| Purchase of  short-term investments                                                  |       | —                 |       | (0.4 | ) |
| Redemption of  short-term investments                                                |       | —                 |       | 0.7 |   |
| Acquisitions,  net of cash acquired                                                  |       | (0.7                   | )          | (2.2 | ) |
| Payments in  connection with the acquisition of Bruker BioSpin                       |       | —                 |       | (5.2 | ) |
| Changes in  restricted cash                                                          |       | (0.2                   | )          | (10.7 | ) |
| Net cash used in  investing activities                                               |       | (4.8                   | )          | (31.2 | ) |
|                                                                                 |       |                   |       |   |   |
| Cash flows from  financing activities:                                               |       |                   |       |   |   |
| Proceeds from  (repayments of) short-term borrowings, net                            |       | (15.6                  | )          | 209.3 |   |
| Proceeds from  (repayments of) long-term debt, net                                   |       | (2.0                   | )          | 149.6 |   |
| Payment of  deferred financing costs                                                 |       | —                 |       | (2.9 | ) |
| Deemed dividend  in connection with the acquisition of Bruker BioSpin                |       | —                 |       | (386.0 | ) |
| Cash payments to  shareholders                                                       |       | —                 |       | (23.4 | ) |
| Net cash used in  financing activities                                               |       | (17.6                  | )          | (53.4 | ) |
|                                                                                 |       |                   |       |   |   |
| Effective of  exchange rate changes on cash and cash equivalents                     |       | (8.5                   | )          | 28.2 |   |
| Net change in  cash and cash equivalents                                             |       | (17.8                  | )          | (34.1 | ) |
| Cash and cash  equivalents at beginning of period                                    |       | 166.2                  |       | 332.4 |   |
| Cash and cash  equivalents at end of period                                          |       | $                      | 148.4      |   | $ | 298.3 |   |

 

*The accompanying notes are an integral part ofthese statements.*

 

3

----

Table of Contents

 

**BRUKER CORPORATION**

**NOTES TO UNAUDITED CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS**

 

**1.****             ****Description of Business**

 

Bruker Corporation andits wholly-owned subsidiaries (the “Company”) design, manufacture, service andmarket proprietary life science and materials research systems based on itscore technology platforms, including X-ray technologies, magnetic resonancetechnologies, mass spectrometry technologies, optical emission spectroscopy andinfrared and Raman molecular spectroscopy technologies. The Company also sellsa broad range of field analytical systems for chemical, biological,radiological and nuclear detection, as well as superconducting wire productsand devices. The Company maintains major technical and manufacturing centers inEurope, North America and Japan and sales offices throughout the world. TheCompany’s diverse customer base includes pharmaceutical, biotechnology andproteomics companies, academic institutions, advanced materials andsemiconductor industries and government agencies.

 

The financial statementsrepresent the consolidated accounts of the Company. All significantintercompany accounts and transactions have been eliminated in consolidation.The condensed consolidated financial statements as of and for the three monthsended March 31, 2009 and 2008 have been prepared in accordance withaccounting principles generally accepted in the United States (“GAAP”) forinterim financial information and pursuant to the rules and regulations ofthe Securities and Exchange Commission for Quarterly Reports on Form 10-Qand Article 10 of Regulation S-X. Accordingly, the financial informationpresented herein does not include all of the information and footnotes requiredby GAAP for complete financial statements. In the opinion of management, alladjustments, consisting only of normal recurring adjustments, considerednecessary for a fair presentation have been included. The results for interimperiods are not necessarily indicative of the results expected for the fullyear. Certain prior year amounts have been reclassified to conform to thecurrent year presentation. These reclassifications had no effect on previouslyreported net income or shareholders’ equity.

 

In February 2008,the Company completed the acquisition of the Bruker BioSpin Group (“BrukerBioSpin”). Both the Company and Bruker BioSpin were majority owned by sixaffiliated shareholders prior to the acquisition. As a result, the acquisitionof Bruker BioSpin was considered a business combination of companies undercommon control and was accounted for at historical carrying values at the dateof the acquisition. The unaudited condensed consolidated balance sheets,statements of operations, statements of cash flows and notes to theconsolidated financial statements for all periods presented herein have beenrestated by combining the historical consolidated financial statements of theCompany with those of Bruker BioSpin. Additionally, because this transactionwas accounted for as a business combination of entities under common control,all one-time transaction costs have been expensed as incurred.

 

The Company reports itsfinancial results on the basis of the following two reportable segments:

 

·                  *BioScience.*  The operations of thissegment include the design, manufacture and distribution of advancedinstrumentation and automated solutions based on X-ray technology and opticalemission spectroscopy, mass spectrometry technology and infrared and Raman molecularspectroscopy technology. Typical customers of the BioScience segment includepharmaceutical, biotechnology, proteomics and molecular diagnostic companies,academic institutions, government agencies, semiconductor companies, chemical,cement, metals and petroleum companies, raw material manufacturers and food,beverage and agricultural companies.

 

·                  *BioSpin.*  The operations of thissegment include the design, manufacture and distribution of enabling lifescience tools based on its core technology, magnetic resonance, as well as themanufacturing and development of low temperature superconductor and hightemperature superconductor wires for use in advanced magnet technology andenergy applications. Typical customers of the BioSpin segment include pharmaceuticaland biotechnology companies, academic institutions and government agencies.

 

**2.****             ****Acquisition of Bruker BioSpin**

 

On February 26,2008, the Company completed the acquisition of all of the outstanding capitalstock of Bruker 

 

4

----

Tableof Contents

 

BioSpin in accordancewith the terms of various stock purchase agreements dated as of December 2,2007. The acquisition of Bruker BioSpin represented a combination of companiesunder common control due to the majority ownership of both companies by sixrelated individuals as an affiliated shareholder group. As a result, theacquisition of Bruker BioSpin was accounted for at historical carrying values.The technologies of Bruker BioSpin are complementary to the Company’saccurate-mass electrospray time-of-flight mass spectrometers and single-crystaldiffraction X-ray spectrometers and have created revenue synergies and providedopportunities to supply customers with equipment packages that have a broaderrange of applications and value. The addition of Bruker BioSpin has alsoenhanced the Company’s worldwide distribution and sales and serviceinfrastructure.

 

At the completion of thisacquisition, the Company paid an aggregate of $914.0 million ofconsideration to the shareholders of Bruker BioSpin, which was financed with57,544,872 shares of unregistered common stock valued at $526.0 million,$351.0 million of cash obtained under a new credit facility and thebalance with cash on hand. The value of the shares of common stock issued inconnection with the merger was determined using a trailing average of theclosing market prices of the Company’s stock for a period of ten consecutivetrading days ending two days prior to the signing of the various stock purchaseagreements.

 

Under the stock purchaseagreements, $98.8 million of the purchase price was paid into escrowaccounts pending the resolution of indemnification obligations and workingcapital obligations of the sellers. In May 2008, $6.8 million of theescrow was released following the receipt of combined audited financialstatements of Bruker BioSpin for the year ended December 31, 2007. In April 2009,the remaining $92.0 million of the escrow was released following thereceipt of audited financial statements of the Company, including BrukerBioSpin, for the year ended December 31, 2008.

 

**3.****           ****Other Acquisitions**

 

In August 2008, theCompany acquired S.I.S. Surface Imaging Systems GmbH (“S.I.S.”), aprivately-held company located in Herzogenrath, Germany. The acquisition ofS.I.S. was accounted for under the purchase method. S.I.S. develops,manufactures and distributes advanced atomic force/scanning probe microscopyfor applications in materials research, including semiconductors, data storage,electronic materials, solar cells, polymers and catalysts. The results ofS.I.S. have been included in the BioScience segment from the date ofacquisition. The aggregate purchase price of S.I.S. was $2.1 million. Inaddition, the Company issued an aggregate of 59,342 restricted unregisteredshares of the Company’s common stock, par value $0.01 per share, to certain ofS.I.S. shareholders. These shares were not included in the purchase pricebecause of contingencies related to the continuing employment of theshareholders and, accordingly, are being recorded as compensation expense. TheCompany recorded $2.1 million of goodwill in connection with theacquisition of S.I.S. and assigned the goodwill to the BioScience segment. Proforma financial information reflecting the acquisition of S.I.S. has not beenpresented because the impact on revenues, net income and net income per commonshare attributable to Bruker Corporation shareholders would not have beenmaterial.

 

In January 2008, theCompany acquired JUWE Laborgeraete GmbH (“JUWE”), a privately-held companylocated in Viersen, Germany. The acquisition of JUWE was accounted for underthe purchase method. JUWE develops, manufactures and distributes advancedcombustion analysis systems for various carbon, hydrogen, nitrogen, oxygen andsulfur elemental applications. JUWE’s products are complementary to the Company’soptical emission spectroscopy products. The results of JUWE have been includedin the BioScience segment from the date of acquisition. The aggregate purchaseprice of JUWE was $1.6 million, of which $1.2 million was paid incash and $0.4 million consisted of net liabilities assumed by the Company.In addition, the Company issued an aggregate of 111,000 restricted unregisteredshares of the Company’s common stock, par value $0.01 per share, to JUWE’sshareholders. These shares were not included in the purchase price because ofcontingencies related to the continuing employment of the shareholders and,accordingly, are being recorded as compensation expense. The Company recorded$1.1 million of goodwill in connection with the acquisition of JUWE andassigned the goodwill to the BioScience segment. Pro forma financialinformation reflecting the acquisition of JUWE has not been presented becausethe impact on revenues, net income and net income per common share attributableto Bruker Corporation shareholders would not have been material.

 

**4.****             ****Stock-Based Compensation**

 

In 2000, the Board ofDirectors adopted and the shareholders approved the 2000 Stock Option Plan. The2000 

 

5

----

Table of Contents

 

Stock Option Planprovides for the issuance of up to 2,188,000 shares of common stock inconnection with awards under the Plan. The 2000 Stock Option Plan allows acommittee of the Board of Directors (the “Committee”) to grant incentive stockoptions, non-qualified stock options, stock appreciation rights and stockawards (including the use of restricted stock and phantom shares). TheCommittee has the authority to determine which employees will receive therewards, the amount of the awards and other terms and conditions of the award.In 2003, the Company’s shareholders approved an amendment and restatement ofthe 2000 Stock Option Plan to change the plan name to the Bruker BioSciencesCorporation Amended and Restated 2000 Stock Option Plan and to increase thenumber of shares by 4,132,000 shares. In 2006, the Company’s shareholdersapproved an amendment and restatement of the Bruker BioSciences CorporationAmended and Restated 2000 Stock Option Plan to increase the number of sharesavailable by 1,680,000 shares. In February 2008, the Company’sshareholders approved another amendment and restatement of the BrukerBioSciences Corporation Amended and Restated 2000 Stock Option Plan to increasethe number of shares available by 2,000,000 shares, to a total of 10,000,000shares.

 

As of March 31, 2009,the Company’s primary types of share-based compensation were in the form ofstock options and restricted stock. The Company recorded stock-basedcompensation expense for the three months ended March 31, 2009 and March 31,2008 as follows (in millions):

 
| ** **                                  | ** ** | **2009** | ** ** | **2008** | ** ** |
|---------------------------------------------|------------|----------|------------|----------|------------|
| Stock options                               |       | $        | 1.3        |     | $          | 0.6 |   |
| Restricted stock                            |       | 0.5      |       | 0.1      |       |
| Total  stock-based compensation, pre-tax    |       | 1.8      |       | 0.7      |       |
| Tax benefit                                 |       | 0.4      |       | 0.2      |       |
| Total  stock-based compensation, net of tax |       | $        | 1.4        |     | $          | 0.5 |   |

 

Compensation expense isamortized on a straight-line basis over the underlying vesting terms. Stockoptions of the Company’s common stock are periodically awarded to executiveofficers and other employees of the Company subject to a vesting period ofthree to five years. The fair value of each option award is estimated on thedate of grant using the Black-Scholes option-pricing model. Assumptionsregarding volatility, expected life, dividend yield and risk-free interest rateare required for the Black-Scholes model and are presented in the table below:

 
| ** **               | ** ** | **2009**    | ** ** | **2008**    | ** ** |
|--------------------------|------------|-------------|------------|-------------|------------|
| Risk-free  interest rate |       | 1.71%-2.72% |       | 2.71%-3.54% |       |
| Expected life            |       | 6.5 years   |       | 6.5 years   |       |
| Volatility               |       | 64.0%       |       | 72.0%       |       |
| Expected  dividend yield |       | 0.0%        |       | 0.0%        |       |

 

Risk-free interest rateis the yield on zero-coupon U.S. Treasury securities for a period that iscommensurate with the expected life assumption. Expected life is determinedthrough the simplified method as defined in the Securities and ExchangeCommission Staff Accounting Bulletin No. 110. The Company believes thatthis is the best estimate of the expected life of a new option because theacquisition of Bruker BioSpin might alter historical exercise patterns.Expected volatility is based on a number of factors. The Company currentlybelieves that the exclusive use of implied volatility results in the bestestimate of the grant-date fair value of employee stock options because itreflects the market’s current expectations of future volatility. Expecteddividend yield was not considered in the option pricing formula since theCompany does not pay dividends and has no current plans to do so in the future.The terms of some of the Company’s indebtedness also currently restricts itsability to pay dividends to its shareholders.

 

Stock option activity forthe three months ended March 31, 2009 was as follows:

 

6

----

Table of Contents

 
| ** **                                          | ** ** | **Shares Subject  to Options** | ** ** | **Weighted  Average  Option Price** | ** ** | **Weighted  Average  Remaining  Contractual  Term (Yrs)** | ** ** | **Aggregate  Intrinsic Value  ($’s in millions)** | ** ** |
|-----------------------------------------------------|------------|--------------------------------|------------|-------------------------------------|------------|-----------------------------------------------------------|------------|--------------------------------------------------------|------------|
| Outstanding at  December 31, 2008              |       | 5,268,523                      |       | $                                   | 8.56       |                                                      |       |                                                   |       |   |
| Granted                                             |       | 48,000                         |       | 4.13                                |       |                                                      |       |                                                   |       |
| Exercised                                           |       | (3,130                         | )          | 3.32                                |       |                                                      |       |                                                   |       |
| Forfeited                                           |       | (22,000                        | )          | 8.49                                |       |                                                      |       |                                                   |       |
| Outstanding at  March 31, 2009                 |       | 5,291,393                      |       | $                                   | 8.52       |                                                      | 4.2        |                                                   | $          | 2.9 |   |
|                                                |       |                           |       |                                |       |                                                      |       |                                                   |       |
| Exercisable at  March 31, 2009                 |       | 2,380,445                      |       | $                                   | 6.92       |                                                      | 3.5        |                                                   | $          | 2.4 |   |
|                                                |       |                           |       |                                |       |                                                      |       |                                                   |       |
| Vested and  expected to vest at March 31, 2009 |       | 5,122,558                      |       | $                                   | 8.48       |                                                      | 3.9        |                                                   | $          | 2.9 |   |

 

Unrecognized stock-basedcompensation expense of $16.3 million related to stock option awards isexpected to be recognized over the weighted average remaining service period of3.0 years for stock options outstanding at March 31, 2009. Theintrinsic values above are based on the Company’s closing stock price of $6.16on March 31, 2009.

 

Restricted shares of theCompany’s common stock are periodically awarded to executive officers,directors and certain key employees of the Company, subject to servicerestrictions which expire ratably over periods of three to five years. Therestricted shares of common stock may not be sold or transferred during therestriction period. Stock compensation for restricted stock is recorded basedon the stock price on the grant date and charged to expense ratably through therestriction period. The following table summarizes information about restrictedstock activity during the quarter ended March 31, 2009:

 
| ** **                             | ** ** | **Shares Subject  to Restriction** | ** ** | **Weighted  Average Grant  Date Fair  Value** | ** ** |
|----------------------------------------|------------|------------------------------------|------------|-----------------------------------------------|------------|
| Outstanding at  December 31, 2008 |       | 591,675                            |       | $                                             | 7.26       |   |
| Granted                                |       | —                             |       | —                                        |       |
| Vested                                 |       | (28,975                            | )          | 5.59                                          |       |
| Forfeited                              |       | (600                               | )          | 5.00                                          |       |
| Outstanding at  March 31, 2009    |       | 562,100                            |       | $                                             | 7.35       |   |

 

Unrecognized pre-taxexpense of $3.3 million related to restricted stock awards is expected tobe recognized over the weighted average remaining service period of2.2 years for restricted stock awards outstanding at March 31, 2009.

 

**5.****           ****Earnings Per Share**

 

Net income per share iscalculated by dividing net income by the weighted-average shares outstandingduring the period. The diluted net income per share computation includes theeffect of shares which would be issuable upon the exercise of outstanding stockoptions and the vesting of restricted stock, reduced by the number of shareswhich are assumed to be purchased by the Company from the resulting proceeds atthe average market price during the period.

 

The following table setsforth the computation of basic and diluted average shares outstanding for thethree months ended March 31, 2009 and 2008 (in millions):

 

7

----

Table of Contents

 
| ** **                                                                                               | ** ** | **2009** | ** ** | **2008** | ** ** |
|----------------------------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|
| Net income  (loss) attributable to Bruker Corporation,  as reported                                      |       | $        | 8.4        |     | $          | (0.8 | ) |
|                                                                                                     |       |     |       |     |       |
| Weighted average  shares outstanding:                                                                    |       |     |       |     |       |
| Weighted average  shares outstanding-basic                                                               |       | 163.3    |       | 162.3    |       |
| Effect of  dilutive securities:                                                                          |       |     |       |     |       |
| Stock options  and restricted stock                                                                      |       | 1.0      |       | —   |       |
| Weighted average  shares outstanding - diluted                                                           |       | 164.3    |       | 162.3    |       |
|                                                                                                     |       |     |       |     |       |
| Net income  (loss) per common share attributable to Bruker Corporation shareholders -  basic and diluted |       | $        | 0.05       |     | $          | (0.00 | ) |

 

Stock options to purchaseapproximately 4.6 million shares were excluded from the computation of dilutedearnings per share in the three months ended March 31, 2009 because theexercise price of the stock options exceeded the average market price of theCompany’s common stock and, as a result, would have had an anti-dilutiveeffect. As a result of the net loss for the three months ended March 31,2008, all outstanding stock options and unvested shares of restricted stock,totaling 5.0 million, were excluded from the computation of diluted earningsper share because their effect was anti-dilutive.

 

**6.****             ****Fair Value of FinancialInstruments**

 

The Company followsFinancial Accounting Standards Board (“FASB”) Statement of Financial AccountingStandard (“SFAS”) No. 157, *Fair ValueMeasurements*, which establishes a three-level valuation hierarchyfor measuring fair value and expands financial statement disclosures about fairvalue measurements. The valuation hierarchy is based upon the transparency ofinputs to the valuation of an asset or liability as of the measurement date. Afinancial instrument’s characterization within the valuation hierarchy is basedupon the lowest level of input that is significant to the fair valuemeasurement. The three levels are defined as follows:

 

*Level 1:*    Inputs to thevaluation methodology are quoted prices (unadjusted) for identical assets orliabilities in active markets.

 

*Level 2:*    Inputs to thevaluation methodology include quoted prices for similar assets and liabilitiesin active markets, and inputs that are observable for the asset or liability,either directly or indirectly, for substantially the full term of the financialinstrument.

 

*Level 3:*    Inputs to thevaluation methodology are unobservable and significant to the fair valuemeasurement.

 

The Company measures thefollowing financial assets and liabilities at fair value on a recurring basis.The fair value of these financial assets and liabilities was determined usingthe following inputs at March 31, 2009 (in millions):

 

8

----

Table of Contents

 
| ** **                                               | ** ** | **Total** | ** ** | **Quoted Prices in  Active Markets  Available (Level 1)** | ** ** | **Significant Other  Observable  Inputs (Level 2)** | ** ** | **Significant  Unobservable  Inputs (Level 3)** | ** ** |
|----------------------------------------------------------|------------|-----------|------------|-----------------------------------------------------------|------------|-----------------------------------------------------|------------|-------------------------------------------------|------------|
| Assets:                                                  |       |      |       |                                                      |       |                                                |       |                                            |       |
| Cash equivalents                                         |       | $         | 31.1       |                                                      | $          | 31.1                                                |       | $                                               | —     |   | $ | — |   |
| Restricted cash                                          |       | 1.5       |       | 1.5                                                       |       | —                                              |       | —                                          |       |
| Long-term  restricted cash                               |       | 1.9       |       | 1.9                                                       |       | —                                              |       | —                                          |       |
| Foreign currency  forward contract                       |       | 0.3       |       | —                                                    |       | 0.3                                                 |       | —                                          |       |
| Total assets  recorded at fair value                     |       | $         | 34.8       |                                                      | $          | 34.5                                                |       | $                                               | 0.3        |   | $ | — |   |
|                                                     |       |      |       |                                                      |       |                                                |       |                                            |       |
| Liabilities:                                             |       |      |       |                                                      |       |                                                |       |                                            |       |
| Interest rate  swap                                      |       | $         | 4.7        |                                                      | $          | —                                              |       | $                                               | 4.7        |   | $ | — |   |
| Embedded  derivatives in purchase and delivery contracts |       | 0.6       |       | —                                                    |       | 0.6                                                 |       | —                                          |       |
| Total  liabilities recorded at fair value                |       | $         | 5.3        |                                                      | $          | —                                              |       | $                                               | 5.3        |   | $ | — |   |

 

The Company’s financialinstruments consist primarily of cash equivalents, restricted cash, accountsreceivable, short-term borrowings, accounts payable and long-term debt. Thecarrying amounts of the Company’s cash equivalents, restricted cash, accountsreceivable, short-term borrowings and accounts payable approximate fair valuedue to their short-term nature. The Company’s long-term debt consists primarilyof variable rate arrangements with interest rates that reset every three monthsand as a result, reflect current interest rates. Consequently, the carryingvalue of the Company’s long-term debt approximates fair value.

 

**7.****             ****Inventories**

 

Inventories consisted ofthe following as of March 31, 2009 and December 31, 2008 (inmillions):

 
| ** **           | ** ** | **March 31,  2009** | ** ** | **December 31,  2008** | ** ** |
|----------------------|------------|--------------------------|------------|-----------------------------|------------|
| Raw materials        |       | $                        | 114.8      |                        | $          | 115.8 |   |
| Work-in-process      |       | 129.0                    |       | 129.6                       |       |
| Demonstration  units |       | 36.8                     |       | 36.7                        |       |
| Finished goods       |       | 139.8                    |       | 143.0                       |       |
| Inventories          |       | $                        | 420.4      |                        | $          | 425.1 |   |

 

The Company reduces thecarrying value of its demonstration inventories for differences between itscost and estimated net realizable value through a charge to cost of revenuethat is based on a number of factors including, the age of the unit, thephysical condition of the unit and an assessment of technological obsolescence.Amounts recorded in cost of product revenue related to the write-down ofdemonstration units to net realizable value were $5.8 million and$6.3 million for the three months ended March 31, 2009 and 2008,respectively.

 

Finished goods includein-transit systems that have been shipped to the Company’s customers but notyet installed and accepted by the customer. As of March 31, 2009 and December 31,2008, inventory-in-transit was $82.5 million and $91.6 million,respectively.

 

**8.****             ****Goodwill and Other IntangibleAssets**

 

The following table setsforth the changes in the carrying amount of goodwill for the three months endedMarch 31, 2009 (in millions):

 
| Balance at December 31,  2008   |   | $    | 46.4   |   |
|--------------------------------------|--------|------|--------|--------|
| Goodwill  acquired during the period |   | 0.3  |   |
| Foreign currency  impact             |   | (1.1 | )      |
| Balance at  March 31, 2009      |   | $    | 45.6   |   |

 

9

----

Table of Contents

 

The Company accounts forgoodwill and other intangible assets in accordance with SFAS No. 142, *Goodwill and Other Intangible Assets* (“SFASNo. 142”). SFAS No. 142 requires that goodwill and intangible assetswith indefinite useful lives not be amortized. Instead, these assets are testedfor impairment on a reporting unit basis annually, or on an interim basis whenevents or changes in circumstances warrant. The Company performed its annualtest for impairment as of December 31, 2008 and determined that goodwillwas not impaired at that time. The Company did not identify any indicators ofimpairment during the three months ended March 31, 2009.

 

The following is asummary of other intangible assets subject to amortization at March 31,2009 and December 31, 2008 (in millions):

 
| ** **                               | ** ** | **March 31, 2009** | ** ** | **December 31, 2008** | ** ** |
|------------------------------------------|------------|-------------------------|------------|----------------------------|------------|
| ** **                               | ** ** | **Gross**               | ** ** | ** **                 | ** ** | **Net** | ** ** | **Gross** | ** ** | ** ** | ** ** | **Net** | ** ** |
| ** **                               | ** ** | **Carrying**            | ** ** | **Accumulated**            | ** ** | **Carrying** | ** ** | **Carrying** | ** ** | **Accumulated** | ** ** | **Carrying** | ** ** |
| ** **                               | ** ** | **Amount**              | ** ** | **Amortization**           | ** ** | **Amount** | ** ** | **Amount** | ** ** | **Amortization** | ** ** | **Amount** | ** ** |
| Existing technology  and related patents |       | $                       | 14.3       |                       | $          | (9.7 | ) | $ | 4.6 |   | $ | 14.1 |   | $ | (9.2 | ) | $ | 4.9 |   |
| Customer  relationships                  |       | 1.6                     |       | (0.7                       | )          | 0.9 |   | 1.6 |   | (0.6 | ) | 1.0 |   |
| Trade names                              |       | 0.4                     |       | (0.3                       | )          | 0.1 |   | 0.4 |   | (0.3 | ) | 0.1 |   |
| Total  amortizable intangible assets     |       | $                       | 16.3       |                       | $          | (10.7 | ) | $ | 5.6 |   | $ | 16.1 |   | $ | (10.1 | ) | $ | 6.0 |   |

 

The Company recordedamortization expense of $0.4 million for the three months ended March 31,2009 and 2008.

 

The estimated futureamortization expense related to other intangible assets is as follows (inmillions):

 
| 2009 (a)   |   | $   | 1.3    |   |
|------------|--------|-----|--------|--------|
| 2010       |   | 1.8 |   |
| 2011       |   | 0.9 |   |
| 2012       |   | 0.4 |   |
| 2013       |   | 0.4 |   |
| Thereafter |   | 0.8 |   |
| Total      |   | $   | 5.6    |   |

 

----

(a) Amount represents estimated amortizationexpense for the remaining nine months ended December 31, 2009.

 

**9.****             ****Debt**

 

At March 31, 2009and December 31, 2008, the Company’s debt obligations consisted of thefollowing (in millions):

 

10

----

Table of Contents

 
| ** **                                                                                                                                                                                                                                | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                                                                                | ** ** | **2009**           | ** ** | **2008**              | ** ** |
| US Dollar term  loan under the Credit Agreement                                                                                                                                                                                           |       | $                  | 142.5      |                  | $          | 144.4 |   |
|                                                                                                                                                                                                                                      |       |               |       |                  |       |
| US Dollar  revolving loan under the Credit Agreement                                                                                                                                                                                      |       | 35.6               |       | 35.6                  |       |
|                                                                                                                                                                                                                                      |       |               |       |                  |       |
| Euro mortgage  loan at six month European Interbank Offered Rate plus 1.00%, 2.7% at  March 31, 2009 collateralized by a building of Bruker AXS GmbH, biannual  principal and interest payments due and payable through 2012         |       | 2.1                |       | 2.2                   |       |
|                                                                                                                                                                                                                                      |       |               |       |                  |       |
| Euro bank loans  at fixed rates of 4.65% and 8.01%, respectively, collateralized by accounts  receivable of certain subsidiaries of Bruker AXS, biannual principal payments  and quarterly interest payments due and payable through 2013 |       | 0.3                |       | 0.3                   |       |
|                                                                                                                                                                                                                                      |       |               |       |                  |       |
| Euro bank loans  at fixed rate of 2.95%, collateralized by land and buildings of Bruker  Daltonik GmbH, quarterly principal payments and monthly interest payments due  and payable through 2010                                          |       | 0.8                |       | 1.0                   |       |
|                                                                                                                                                                                                                                      |       |               |       |                  |       |
| Euro bank loans  at fixed rate of 5.01%, collateralized by land and buildings of Bruker Optik  GmbH, biannual principal payments and monthly interest payments due and  payable through 2013                                              |       | 10.1               |       | 10.7                  |       |
|                                                                                                                                                                                                                                      |       |               |       |                  |       |
| Japanese Yen  bank loan at fixed rate of 2.03%, uncollateralized, quarterly principal and  interest payments due and payable through 2011                                                                                                 |       | 1.4                |       | 1.6                   |       |
|                                                                                                                                                                                                                                      |       |               |       |                  |       |
| Capital lease  obligations                                                                                                                                                                                                                |       | 4.8                |       | 5.3                   |       |
| Total long-term  debt                                                                                                                                                                                                                     |       | 197.6              |       | 201.1                 |       |
| Current portion  of long-term debt                                                                                                                                                                                                        |       | (24.9              | )          | (18.3                 | )          |
| Total long-term  debt, less current portion                                                                                                                                                                                               |       | $                  | 172.7      |                  | $          | 182.8 |   |

 

In addition, at March 31,2009 and December 31, 2008, the Company had the following amountsoutstanding under revolving loan arrangements (in millions):

 
| ** **                                       | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|--------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                       | ** ** | **2009**           | ** ** | **2008**              | ** ** |
| Euro revolving  loans under the Credit Agreement |       | $                  | —     |                  | $          | 16.5 |   |
| Other revolving  loans                           |       | 6.0                |       | 6.2                   |       |
| Total short-term  borrowings                     |       | $                  | 6.0        |                  | $          | 22.7 |   |

 

In connection with theacquisition of Bruker BioSpin, the Company entered into a credit agreement witha syndication of lenders (the “Credit Agreement”), which provides for arevolving credit line with a maximum commitment of $230.0 million and aterm facility of $150.0 million. The outstanding principal and interestunder the term loan is payable in quarterly installments through December 2012.Borrowings under the Credit Agreement bear interest, at the Company’s option,at either (i) the higher of the prime rate or the federal funds rate plus0.50%, or (ii) adjusted LIBOR, plus margins ranging from 0.40% to 1.25%and a facility fee ranging from 0.10% to 0.20%. As of March 31, 2009, theweighted average interest rate of borrowings under the term facility of theCredit Agreement was approximately 3.1%.

 

11

----

Table of Contents

 

Borrowings under theCredit Agreement are secured by the pledge to the banks of 100% of the capitalstock of each of the Company’s wholly-owned domestic subsidiaries and 65% ofthe capital stock of certain of the Company’s direct or indirect wholly-ownedforeign subsidiaries. The Credit Agreement also requires the Company tomaintain certain financial ratios related to leverage ratios and interestcoverage ratios as defined in the Credit Agreement. In addition to thefinancial ratios, the Credit Agreement restricts, among other things, theCompany’s ability to do the following: make certain payments; incur additionaldebt; incur certain liens; make certain investments, including derivativeagreements; merge, consolidate, sell or transfer all or substantially all ofthe Company’s assets; and enter into certain transactions with affiliates.

 

Revolving loans are withvarious financial institutions primarily in the United States, Germany, Japanand France and have aggregate maximum credit amount of approximately $294.8million at March 31, 2009. The aggregate maximum credit amount includesthe $230.0 million revolving line of credit under the Credit Agreement.Borrowings under revolving lines of credit at March 31, 2009 consisted of$35.6 million outstanding under the Credit Agreement and $6.0 millionoutstanding under other revolving lines of credit. However, of the$35.6 million of revolving loans outstanding under the Credit Agreement,$30.6 million is classified as long-term debt because the Company does notexpect to repay this portion in the next twelve months. Taking outstandingletters of credit into consideration, the Company had availability ofapproximately $202.0 million at March 31, 2009. At March 31, 2009,the weighted average interest rates on revolving lines of credit were 2.4%.

 

The Company’s otherrevolving lines of credit typically are due upon demand with interest payablemonthly. Lines of credit can either be unsecured or secured by the accountsreceivable and inventory of the related subsidiary.

 

**10.****      ****Derivative Instruments andHedging Activities**

 

The Company accounts forderivative financial instruments in accordance with SFAS No. 133, *Accounting for Derivative Instruments and HedgingActivities*, (“SFAS No. 133”) as amended. All derivatives,whether designated in hedging relations or not, are recorded on the unauditedcondensed consolidated balance sheets at fair value. The accounting for changesin fair value of a derivative instrument depends on whether it has beendesignated and qualifies as part of a hedging relationship and further, on thetype of hedging relationship. For those derivative instruments that aredesignated and qualify as hedging instruments the Company must designate thehedging instrument, based on the exposure being hedged, as a fair value hedge,cash flow hedge or a hedge of a net investment in a foreign operation.

 

A fair value hedge is aderivative instrument designated for the purpose of hedging the exposure ofchanges in fair value of an asset or a liability resulting from a particularrisk. If the derivative is designated as a fair value hedge, the changes in thefair value of the derivative and of the hedged item attributable to the hedgedrisk are both recognized in the same caption in the unaudited condensedconsolidated statements of operations. A cash flow hedge is a derivativeinstrument designated for the purpose of hedging the exposure to variability infuture cash flows resulting from a particular risk. If the derivative isdesignated as a cash flow hedge, the effective portions of changes in the fairvalue of the derivative are recorded in accumulated other comprehensive incomeand are recognized in the results of operations when the hedged item affectsearnings. Ineffective portions of changes in the fair value of cash flow hedgesare recognized in the results of operations. A hedge of a net investment in aforeign operation is designated for the purpose of hedging the exposure ofchanges in value of investments in foreign subsidiaries. If the derivative isdesignated as a hedge of a net investment in a foreign operation, the effectiveportions of changes in the fair value of the derivative are recorded in othercomprehensive income as a part of the currency translation adjustment.Ineffective portions of net investment hedges are recognized in the results ofoperations. For derivative instruments, not designated as hedging instrumentschanges in fair value are recognized in the results of operations in thecurrent period.

 

The Company is exposed tocertain market risks associated with its ongoing business operations. Theprimary risks that are managed by using derivative instruments are associatedwith changes in interest rates and foreign exchange rates.

 

The Company’s exposure tointerest rate risk relates primarily to outstanding variable-rate debt andadverse movements in the related short-term market rates. The most significantcomponent of the Company’s interest rate risk relates to the amountsoutstanding under the Credit Agreement. In April 2008, the Company enteredinto an

 

12

----

Table of Contents

 

interest rate swaparrangement to manage its exposure to interest rate movements and the relatedeffect on its variable rate debt. Under this interest rate swap arrangement,the Company pays a fixed rate of approximately 3.8% and receives a variable ratebased on three month LIBOR. The interest rate swap agreement utilized by theCompany effectively modifies the Company’s exposure to interest rate risk byconverting a portion of the Company’s variable rate debt to a fixed rate forthe term of the Credit Agreement. The initial notional amount of this interestrate swap was $90.0 million and it amortizes in proportion to the termdebt component of the Credit Agreement through December 2012. At March 31,2009, the notional amount of this interest rate swap was $85.5 million.The Company concluded that this swap met the criteria to qualify as aneffective hedge of the variability of cash flows of the interest payments andaccounts for the hedge as a cash flow hedge under SFAS No. 133.Accordingly, the Company reflects changes in the fair value of this interestrate swap in accumulated other comprehensive income, a component ofshareholders’ equity. The Company expects $2.2 million of the accumulated lossto be reclassified into earnings over the next twelve months.

 

The Company periodicallyenters into foreign currency contracts in order to minimize the volatility thatfluctuations in currency exchange rates have on the Company’s cash flowsrelated to purchases and sales denominated in foreign currencies. Under thesearrangements, the Company typically agrees to purchase a fixed amount of aforeign currency in exchange for a fixed amount of U.S. Dollars or othercurrencies on specified dates with maturities of less than twelve months. At March 31,2009, the Company had one outstanding forward contract involving the purchaseof 3.7 million Euros (approximately $4.9 million at March 31, 2009) inexchange for 463.0 million Japanese Yen (approximately $4.6 million at March 31,2009). The Company entered into this contract in connection with a large orderfrom a customer in Japan. This transaction does not qualify for hedgeaccounting under SFAS No. 133 and, accordingly, the instrument is recordedat fair value with the corresponding gains and losses recorded in the unauditedcondensed consolidated statements of operations.

 

The Company enters intocontracts for the purchase of goods and the sale of the Company’s products thatare denominated in currencies other than the functional currency of the partiesto the transaction. In accordance with SFAS No. 133, the Company accountsfor these transactions separately valuing the “embedded derivative” componentof these contracts. At March 31, 2009, contracts denominated in currenciesother than the functional currency of the transacting parties amounted to$37.5 million for the delivery of products and $4.9 million for thepurchase of products. At December 31, 2008, contracts denominated incurrencies other than the functional currency of the transacting partiesamounted to $44.2 million for the delivery of products and$5.4 million for the purchase of products.

 

The fair values ofderivative instruments and the location in the unaudited condensed consolidatedbalance sheets are as follows (in millions):

 

13

----

Table of Contents

 
| ** **                                                                                  | ** ** | **March 31, 2009**     | ** ** | **December 31, 2008** | ** ** |
|---------------------------------------------------------------------------------------------|------------|-----------------------------|------------|----------------------------|------------|
| ** **                                                                                  | ** ** | **Balance Sheet  Location** | ** ** | **Fair Value**             | ** ** | **Balance Sheet  Location** | ** ** | **Fair Value** | ** ** |
| Derivative  assets:                                                                         |       |                        |       |                       |       |   |   |   |   |
| Derivative  assets not designated as hedging instruments under SFAS No. 133:           |       |                        |       |                       |       |   |   |   |   |
| Foreign exchange  contract                                                                  |       | Other current  assets       |       | $                          |  0.3  |   | Other current  assets |   | $ |  — |   |
| Total derivative  assets not designated as hedging instruments under SFAS No. 133      |       |                        |       | 0.3                        |       |   |   | — |   |
| Total derivative  assets                                                                    |       |                        |       | $                          |  0.3  |   |   |   | $ |  — |   |
|                                                                                        |       |                        |       |                       |       |   |   |   |   |
| Derivative  liabilities:                                                                    |       |                        |       |                       |       |   |   |   |   |
| Derivative  liabilities designated as hedging instruments under SFAS No. 133:          |       |                        |       |                       |       |   |   |   |   |
| Interest rate  swap contract                                                                |       | Other current  liabilities  |       | $                          |  4.7  |   | Other current  liabilities |   | $ |  4.8 |   |
| Total derivative  liabilities designated as hedging instruments under SFAS No. 133     |       |                        |       | 4.7                        |       |   |   | 4.8 |   |
|                                                                                        |       |                        |       |                       |       |   |   |   |   |
| Derivative  liabilities not designated as hedging instruments under SFAS No. 133:      |       |                        |       |                       |       |   |   |   |   |
| Embedded  derivatives                                                                       |       | Other current  liabilities  |       | 0.6                        |       | Other current  liabilities |   | 2.2 |   |
| Total derivative  liabilities not designated as hedging instruments under SFAS No. 133 |       |                        |       | 0.6                        |       |   |   | 2.2 |   |
| Total derivative  liabilities                                                               |       |                        |       | $                          | 5.3        |   |   |   | $ |  7.0 |   |

 

The impact of changes inthe fair value of derivative instruments designated as hedging instruments oncomprehensive income and net income are as follows (in millions):

 
| ** **                   | ** ** | **Amount of Gain (Loss) Recognized** | ** ** |
|------------------------------|------------|--------------------------------------|------------|
| ** **                   | ** ** | **in OCI on Derivative**             | ** ** |
| ** **                   | ** ** | **(Effective Portion)**              | ** ** |
| ** **                   | ** ** | **March 31,  2009**             | ** ** | **March 31,  2008** | ** ** |
| Interest rate  swap contract |       | $                                    | (0.4       | )    | $ |  — |   |
|                              |            |                                      |            |  |  |  |  |

 
| ** **                   | ** ** | **Amount of Gain (Loss) Reclassified** | ** ** |
|------------------------------|------------|----------------------------------------|------------|
| ** **                   | ** ** | **from Accumulated OCI into Income**   | ** ** |
| ** **                   | ** ** | **(Effective Portion)**                | ** ** |
| ** **                   | ** ** | **March 31,  2009**               | ** ** | **March 31,  2008** | ** ** |
| Interest rate  swap contract |       | $                                      |  (0.5 | )    | $ |  — |   |
|                              |            |                                        |            |  |  |  |  |

 

The amounts reclassifiedfrom accumulated other comprehensive income to income and the ineffectiveportion of derivatives is recorded in interest and other income (expense), net.The Company did not recognize any amounts related to ineffectiveness in theconsolidated statements of operations during the three months ended March 31,2009 and 2008, respectively.

 

The impact of changes inthe fair value of derivative instruments not designated as hedging instrumentson net income are as follows (in millions):

 

14

----

Table of Contents

 
| ** **                  | ** ** | **March 31,  2009** | ** ** | **March 31,  2008** | ** ** |
|-----------------------------|------------|--------------------------|------------|--------------------------|------------|
| Foreign exchange  contracts |       | $                        |  0.3  |                     | $          |  (0.3 | ) |
| Embedded  derivatives       |       | 1.5                      |       | (1.2                     | )          |
| Income  (expense), net      |       | $                        |  1.8  |                     | $          |  (1.5 | ) |

 

The amounts recorded inthe consolidated statements of operations related to derivative instruments notdesignated as hedging instruments are recorded in interest and other income(expense), net.

 

**11.****      ****Restructuring Activities**

 

In the fourth quarter of2008, the Company recorded restructuring charges of $2.3 million, whichconsisted primarily of severance costs associated with a restructuring ofcertain operations in the Netherlands (the “Netherlands Program”). Therestructuring charges associated with the Netherlands Program were allocated tothe BioScience segment. Approximately $2.2 million of the restructuringcharges relate to an involuntary severance program under which approximately 30employees are expected to leave the Company and the balance relates to exitcosts associated with terminating certain leases. The impact of this programreduced the number of employees in sales and marketing and research anddevelopment and consolidates the selling and developments efforts of theCompany’s single crystal diffraction products. The Company does not expect toincur any additional costs related to the Netherlands Program and expects tohave made all of the severance payments by the end of 2009. The liability forrestructuring charges is recorded in other current liabilities in the unauditedcondensed consolidated balance sheets. The reserves related to this program areas follows (in millions):

 
| ** **                         | ** ** | **Total** | ** ** | **Severance** | ** ** | **Exit Costs** | ** ** |
|------------------------------------|------------|-----------|------------|---------------|------------|----------------|------------|
| Balance at  December 31, 2008 |       | $         |  2.3  |          | $          |  2.2      |       | $ |  0.1 |   |
| Cash payments                      |       | (0.3      | )          | (0.2          | )          | (0.1           | )          |
| Foreign currency  impact           |       | (0.1      | )          | (0.1          | )          | —         |       |
| Balance at  March 31, 2009    |       | $         |  1.9  |          | $          |  1.9      |       | $ |  — |   |

 

**12.****      ****Employee Benefit Plans**

 

Substantially all of theCompany’s employees in Switzerland, France and Japan, as well as certainemployees in Germany, are covered by Company-sponsored defined benefit pensionplans. Retirement benefits are generally earned based on years of service andcompensation during active employment. Eligibility is generally determined inaccordance with local statutory requirements; however, the level of benefitsand terms of vesting varies among plans.

 

The net periodic pensioncost consists of the following components for the three months ended March 31,2009 and 2008 (in millions):

 
| ** **                                 | ** ** | **2009** | ** ** | **2008** | ** ** |
|--------------------------------------------|------------|----------|------------|----------|------------|
| Components of  net periodic pension costs: |       |     |       |     |       |
| Service cost                               |       | $        |  0.9  |     | $          |  0.9 |   |
| Interest cost                              |       | 1.0      |       | 1.0      |       |
| Expected return  on plan assets            |       | (0.9     | )          | (1.0     | )          |
| Net periodic  benefit costs                |       | $        |  1.0  |     | $          |  0.9 |   |

 

The Company madecontributions of $0.6 million to its defined benefit plans during the threemonths ended March 31, 2009 and estimates contributions of $1.6 millionwill be made during the remainder of 2009.

 

15

----

Table of Contents

 

**13.****      ****Interest and Other Income(Expense), Net**

 

The components ofinterest and other income (expense), net, were as follows for the three monthsended March 31, 2009 and 2008 (in millions):

 
| ** **                                                | ** ** | **2009** | ** ** | **2008** | ** ** |
|-----------------------------------------------------------|------------|----------|------------|----------|------------|
| Interest income                                           |       | $        |  0.4  |     | $          |  2.5 |   |
| Interest expense                                          |       | (2.3     | )          | (2.7     | )          |
| Exchange gains  (losses) on foreign currency transactions |       | 1.3      |       | (12.2    | )          |
| Other                                                     |       | 0.7      |       | 0.2      |       |
| Interest and  other income (expense), net                 |       | $        |  0.1  |     | $          |  (12.2 | ) |

 

**14.****      ****Provision for Income Taxes**

 

The Company accounts forincome taxes in accordance with SFAS No. 109, *Accounting for Income Taxes* (“SFAS No. 109”). SFAS No. 109requires the asset and liability approach to account for income taxes byrecognizing deferred tax assets and liabilities for the expected future taxconsequences of differences between the financial statement basis and the taxbasis of assets and liabilities, calculated using enacted tax rates in effectfor the year in which the differences are expected to be reflected in the taxreturn. The Company records a valuation allowance to reduce deferred tax assetsto the amount that is more likely than not to be realized.

 

In addition, the Companyaccounts for uncertain tax positions in accordance with the provisions of FASBInterpretation No. 48, *Accounting forUncertainty in Income Taxes—an interpretation of FASB Statement No. 109*  (“FIN No. 48”). Among other things, FIN No. 48provides guidance to address uncertainty in tax positions and clarifies theaccounting for income taxes by prescribing a minimum recognition threshold,which an income tax position must achieve before being recognized in thefinancial statements.

 

The income tax provisionfor the three months ended March 31, 2009 was $5.8 million compared to anincome tax provision of $4.2 million for the three months ended March 31,2008, representing effective tax rates of 40.3% and 116.7%, respectively. TheCompany’s effective tax rate reflects the tax provision (benefit) for non-U.S.entities only, since no benefit was recognized for cumulative losses incurredin the U.S. A full valuation allowance will be maintained for U.S. netoperating losses until evidence exists that it is more likely than not that theloss carryforward amounts will be utilized to offset U.S. taxable income. TheCompany’s tax rate may change over time as the amount or mix of income andtaxes outside the U.S. changes. The effective tax rate is calculated usingprojected annual pre-tax income or loss and is affected by research anddevelopment tax credits, the expected level of other tax benefits, the impactof changes to the valuation allowance, and changes in the mix of the Company’spre-tax income and losses among jurisdictions with varying statutory tax ratesand credits.

 

The Company hasunrecognized tax benefits of approximately $21.3 million as of March 31,2009, of which $11.4 million, if recognized, would result in a reduction of theCompany’s effective tax rate. The Company recognizes penalties andinterest related to unrecognized tax benefits in the provision for incometaxes. As of March 31, 2009 and December 31, 2008, approximately $3.1million and $3.0 million of accrued interest and penalties related to uncertaintax positions was included in other current liabilities on the unauditedcondensed consolidated balance sheets, of which $0.1 million and $0.4 millionwas recorded during the three months ended March 31, 2009 and 2008,respectively.

 

The Company files returnsin many foreign and state jurisdictions with varying statutes of limitations,but considers its significant tax jurisdictions to include the United States,Germany and Switzerland. The tax years 2003 to 2008 are open tax years in thesemajor taxing jurisdictions. One of the Company’s Swiss entities is currentlybeing audited for the tax years 2003 through 2006 and the audit is expected tobe completed during 2009. In addition, all of the Company’s German subsidiarieswill be under tax audit for the years 2003 through 2008 beginning in the firsthalf of 2009. The Company cannot reasonably predict the timing or outcome ofthese audits.

 

**15.****      ****Comprehensive Income (Loss)**

 

Comprehensive incomerefers to revenues, expenses, gains and losses that under GAAP are included inother

 

16

----

Table of Contents

 

comprehensive income, butexcluded from net income as these amounts are recorded directly as anadjustment to shareholders’ equity, net of tax. The following is a summary ofcomprehensive income (loss) for the three months ended March 31, 2009 and2008 (in millions):

 
| ** **                                                                                        | ** ** | **2009** | ** **  | **2008** | ** ** |
|---------------------------------------------------------------------------------------------------|------------|----------|-------------|----------|------------|
| Consolidated net  income (loss)                                                                   |       | $        |  8.6   |     | $          |  (0.6 | ) |
| Foreign currency  translation adjustments                                                         |       | (26.4    | )           | 39.1     |       |
| Unrealized  losses on interest rate swap:                                                         |       |     |        |     |       |
| Unrealized  holding losses arising during the period                                              |       | (0.4     | )           | —   |       |
|                                                                                              |       |     |        |     |       |
| Reclassification  adjustments for settlements included in the determination of net income  (loss) |       | 0.5      |        | —   |       |
| Unrealized gains  on available for sale securities:                                               |       |     |        |     |       |
| Unrealized  holding gains arising during the period                                               |       | —   |        | 0.8      |       |
| Pension  liability adjustments                                                                    |       | 1.0      |        | (0.5     | )          |
| Total  comprehensive income (loss)                                                                |       | (16.7    | )           | 38.8     |       |
| Less:  Comprehensive income attributable to noncontrolling interests                              |       | 0.2      |        | 0.2      |       |
| Comprehensive  income (loss) attributable to Bruker Corporation                                   |       | $        |  (16.9 | )        | $          |  38.6 |   |

 

**16. Noncontrolling Interests**

 

Net income attributableto noncontrolling interests for the three months ended March 31, 2009 and March 31,2008 was $0.2 million, which represents the minority shareholders’proportionate share of the net income recorded by the Company’s threemajority-owned indirect subsidiaries, InCoaTec GmbH and Bruker Baltic Ltd.which are included in the BioScience segment and Perch Solutions OY which isincluded in the BioSpin segment. There were no transfers to or from thenoncontrolling interests during the three months ended March 31, 2009 or March 31,2008.

 

**17.****      ****Commitments and Contingencies**

 

***Legal***

 

Lawsuits, claims andproceedings of a nature considered normal to its businesses may be pending fromtime to time against the Company. The Company believes the outcome of theseproceedings, if any, will not have a material impact on the Company’s financialposition or results of operations. As of March 31, 2009 and December 31,2008, no accruals have been recorded for such potential contingencies.

 

***Lettersof Credit and Guarantees***

 

At March 31, 2009and December 31, 2008, the Company had bank guarantees of $51.2 millionand $62.1 million, respectively, for its customer advances. Thesearrangements guarantee the refund of advance payments received from customersin the event that the merchandise is not delivered in compliance with the termsof the contract. Certain of these guarantees affect the availability of theCompany’s lines of credit.

 

**18.****      ****Business Segment Information**

 

SFAS No. 131,*Disclosures about Segments of an Enterprise andRelated Information*, establishes standards for reporting informationabout operating segments in annual financial statements of public businessenterprises. It also establishes standards for related disclosures aboutproducts and service, geographic areas and major customers. Operating segmentsare identified as components of an enterprise for which separate discretefinancial information is available for evaluation by the chief operatingdecision maker for the purpose of allocating resources and assessing

 

17

----

Table of Contents

 

performance.

 

The Company hasdetermined that it has four operating segments, representing each of its fourdivisions: Bruker AXS, Bruker Daltonics, Bruker Optics and Bruker BioSpin.Bruker AXS is in the business of manufacturing and distributing advanced X-rayand OES-spark instrumentation used in non-destructive molecular and elementalanalysis. Bruker Daltonics is in the business of manufacturing and distributingmass spectrometry instruments that can be integrated and used along with otheranalytical instruments. Bruker Optics is in the business of manufacturing anddistributing research, analytical and process analysis instruments andsolutions based on infrared and Raman molecular spectroscopy technologies. BrukerBioSpin is in the business of manufacturing and distributing enabling lifescience tools based on magnetic resonance technology, as well as thedevelopment and manufacturing of low temperature superconductor and hightemperature superconductor wires for use in advanced magnet technology andenergy applications.

 

The Company has combinedthe Bruker AXS, Bruker Daltonics and Bruker Optics operating segments into theBioScience reporting segment because each has similar economic characteristics,product processes and services, types and classes of customers, methods ofdistribution and regulatory environments.

 

Selected business segmentinformation for the three months ended March 31, 2009 and 2008 ispresented below (in millions):

 
| ** **                             | ** ** | **2009**   | ** ** | **2008**   | ** ** |
|----------------------------------------|------------|------------|------------|------------|------------|
| Revenue:                               | ** ** | ** ** | ** ** | ** ** | ** ** |
| BioScience                             |       | $          | 126.6      |       | $          | 142.6 |   |
| BioSpin                                |       | 114.6      |       | 112.1      |       |
| Eliminations (a)                       |       | (10.7      | )          | (16.4      | )          |
| Total revenue                          |       | $          | 230.5      |       | $          | 238.3 |   |
|                                   |       |       |       |       |       |
| Operating  Income:                     | ** ** | ** ** | ** ** | ** ** | ** ** |
| BioScience                             |       | $          | 2.2        |       | $          | 11.7 |   |
| BioSpin                                |       | 15.7       |       | 10.0       |       |
| Corporate,  eliminations and other (b) |       | (3.6       | )          | (5.9       | )          |
| Total operating  income                |       | $          | 14.3       |       | $          | 15.8 |   |

 

----

(a) Representsproduct and service revenue between reportable segments.

(b) Representscorporate costs not allocated to the reportable segments.

 

Total assets by segmentas of March 31, 2009 and December 31, 2008 are as follows (inmillions):

 
| ** **                             | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|----------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                             | ** ** | **2009**           | ** ** | **2008**              | ** ** |
| BioScience                             |       | $                  | 603.3      |                  | $          | 652.2 |   |
| BioSpin                                |       | 663.4              |       | 650.8                 |       |
| Corporate,  eliminations and other (a) |       | (207.6             | )          | (186.7                | )          |
| Total                                  |       | $                  | 1,059.1    |                  | $          | 1,116.3 |   |

 

----

(a) Representscorporate assets not allocated to the reportable segments and eliminations ofintercompany transactions.

 

**19.****      ****Recent Accounting Pronouncements**

 

In December 2008,the FASB issued Staff Position No. 132(R)-1, *Employers’ Disclosures about Postretirement Benefit Plan Assets*(“FSP132(R)-1”). FSP 132(R)-1 requires detailed disclosures regarding the investmentstrategies, fair value measurements, and concentrations of risk of plan assetsof a defined benefit pension or other

 

18

----

Table of Contents

 

postretirement plan. FSP132(R)-1 is effective for fiscal years ending after December 15, 2009 andwill be applied prospectively. The Company is currently assessing the impactthat FSP 132(R)-1 will have on its results of operations and financialposition.

 

In March 2008, theFASB issued SFAS No. 161,*Disclosuresabout Derivative Instruments and Hedging Activities—an amendment of FASBStatement No. 133*(“SFAS No. 161”). SFAS No. 161requires enhanced disclosures about an entity’s derivative and hedgingactivities and, thereby, improves the transparency of financial reporting. SFASNo. 161 became effective for the Company as of the beginning of fiscal2009. The adoption of SFAS No. 161 did not have a material impact on ourresults of operations, financial position or cash flows.

 

In December 2007,the FASB issued SFAS No. 160, *NoncontrollingInterests in Consolidated Financial Statements—An Amendment of ARB No. 51*(“SFAS No. 160”). This statement establishes new accounting and reportingstandards for the minority interest in a subsidiary and the deconsolidation ofa subsidiary. SFAS No. 160 became effective for the Company as of thebeginning of fiscal 2009. The adoption of SFAS No. 160 did not have amaterial impact on our results of operations, financial position or cash flows.

 

In September 2006,the FASB issued SFAS No. 157, *FairValue Measurements* (“SFAS No. 157”),which is effective for fiscal years beginning after November 15, 2007. TheCompany adopted SFAS No. 157 as of January 1, 2008. The adoption ofSFAS No. 157 did not have a material impact on the Company’s financialposition, results of operations or cash flows. In April 2009, theFASB issued FSP No. SFAS 157-4, *Determining Fair ValueWhen the Volume and Level of Activity for the Asset or Liability HaveSignificantly Decreased and Identifying Transactions That Are Not Orderly*(“FSP SFAS No. 157-4”).  FSP SFAS No. 157-4affirms that the objective of fair value when the market for an asset is notactive is the price that would be received to sell the asset in an orderlytransaction, and clarifies and includes additional factors for determiningwhether there has been a significant decrease in market activity for an assetwhen the market for that asset is not active. FSP SFAS No. 157-4 iseffective for interim and annual reporting periods ending after June 15,2009. Adoption of this position is not expected to have a material impact onthe Company’s financial position, results of operations or cash flows.

 

19

----

Table of Contents

 
| **ITEM  2.** | **MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** |
|--------------|-------------------------------------------------------------------------------------------------|

 

The following discussionof our financial condition and results of operations should be read inconjunction with our interim unaudited condensed consolidated financialstatements and the notes to those statements included in Part 1, Item 1 ofthis Quarterly Report on Form 10-Q, and in conjunction with theconsolidated financial statements contained in our Annual Report on Form 10-Kfor the year ended December 31, 2008.

 

Statements contained inManagement’s Discussion and Analysis of Financial Condition and Results ofOperations, which express that we “believe,” “anticipate,” “plan,” “expect,” “seek,”“estimate,” or “should,” as well as other statements, which are not historicalfact, are forward-looking statements within the meaning of the PrivateSecurities Litigation Act of 1995. Actual events or results may differ materiallyfrom those set forth in forward-looking statements. Certain factors that mightcause such a difference are discussed in “Factors Affecting Our Business,Operating Results and Financial Condition” set forth in our Annual Report on Form 10-Kfor the year ended December 31, 2008.

 

**OVERVIEW**

 

The following Management’sDiscussion and Analysis of Financial Condition and Results of Operations, orMD&A, describes the principal factors affecting the results of ouroperations, financial condition and changes in financial condition, as well asour critical accounting policies and estimates. Our MD&A is organized asfollows:

 

·                  *Executive overview*. This section provides a generaldescription and history of our business, a brief discussion of our reportablesegments, significant recent developments in our business and otheropportunities, challenges and risks that may impact our business in the future.

 

·                  *Critical accountingpolicies*. Thissection discusses the accounting estimates that are considered important to ourfinancial position and results of operations and require us to exercisesubjective or complex judgments in their application.

 

·                  *Results of operations*. This section provides our analysis ofthe significant line items on our consolidated statement of operations for thethree months ended March 31, 2009 compared to the three months ended March 31,2008.

 

·                  *Liquidity and capitalresources*. Thissection provides an analysis of our liquidity and cash flow and a discussion ofour outstanding debt and commitments.

 

·                  *Recent accountingpronouncements*.This section provides information about new accounting standards that have beenissued but for which adoption is not yet required.

 

**EXECUTIVEOVERVIEW**

 

**BusinessOverview**

 

Bruker Corporation andits wholly-owned subsidiaries design, manufacture, market and serviceproprietary life science and materials research systems based on our coretechnology platforms, including X-ray technologies, magnetic resonancetechnologies, mass spectrometry technologies, optical emission spectroscopy andinfrared and Raman molecular spectroscopy technologies. We also manufacture anddistribute a broad range of field analytical systems for chemical, biological,radiological and nuclear, or CBRN, detection. We also develop and manufacture lowtemperature and high temperature wires for use in advanced magnet technologyand energy applications. We maintain major technical and manufacturing centersin Europe, North America and Japan and we have sales offices located throughoutthe world. Our corporate headquarters are located in Billerica, Massachusetts.

 

Our business strategy isto capitalize on our ability to innovate and generate above industry-average revenueperformance, both organically and through acquisitions. Our growth strategycombined with anticipated improvements to our 

 

20

----

Table of Contents

 

gross profit margins andincreased leverage on our research and development, sales and marketing anddistribution investments and general and administrative expenses is expected toenhance our operating margins and improve our earnings in the future.

 

On February 26,2008, we completed our acquisition of Bruker BioSpin. Both the Company andBruker BioSpin were majority owned by six affiliated shareholders prior to theacquisition. As a result, the acquisition of Bruker BioSpin is considered acombination of companies under common control, and has been accounted for athistorical carrying values. Historical unaudited condensed consolidated balancesheets, statements of operations, statements of cash flows and notes to theconsolidated financial statements have been restated by combining thehistorical consolidated financial statements of Bruker Corporation with thoseof Bruker BioSpin. Because the transaction was accounted for as an acquisitionof businesses under common control, all one-time transaction costs have beenexpensed as incurred.

 

With the addition ofBruker BioSpin, we enhanced our position as a leading supplier of life scienceand materials research systems. The technologies of Bruker BioSpin areparticularly complementary to our accurate-mass electrospray time-of-flightmass spectrometers and our single-crystal diffraction X-ray spectrometers andhave created revenue synergies and provided opportunities to supply customerswith equipment packages that have a broader range of applications and value.The addition of Bruker BioSpin has also enhanced our distribution in theAmericas, Europe and Asia and our sales and service infrastructure.

 

We are organized intofour operating segments, representing each of our four divisions: Bruker AXS,Bruker Daltonics, Bruker Optics and Bruker BioSpin. Bruker AXS is in the businessof manufacturing and distributing advanced X-ray and OES-spark instrumentationused in non-destructive molecular and elemental analysis. Bruker Daltonics isin the business of manufacturing and distributing mass spectrometry instrumentsthat can be integrated and used along with other analytical instruments and ourCBRN detection products. Bruker Optics is in the business of manufacturing anddistributing research, analytical and process analysis instruments andsolutions based on infrared and Raman molecular spectroscopy technologies.Bruker BioSpin is in the business of manufacturing and distributing enablinglife science tools based on magnetic resonance technology. Bruker BioSpin alsoincludes Bruker Advanced Supercon, which develops and produces low temperaturesuperconducting, or LTS, wires used primarily in magnetic resonancetechnologies, high-energy physics and nuclear fusion research magnetapplications and high temperature superconducting, or HTS, wires for use inenergy applications.

 

We have combined theBruker AXS, Bruker Daltonics and Bruker Optics operating segments into theBioScience reporting segment because each has similar economic characteristics,product processes and services, types and classes of customers, methods ofdistribution and regulatory environments. Management reports its results basedon the following reportable segments:

 

·                  *BioScience.*The operations of this segment includethe design, manufacture and distribution of advanced instrumentation andautomated solutions based on X-ray technology, OES-spark technology, massspectrometry technology and infrared and Raman molecular spectroscopytechnology. Typical customers of the BioScience segment include pharmaceutical,biotechnology, proteomics and molecular diagnostic companies, academicinstitutions, government agencies, semiconductor companies, chemical, cement,metals and petroleum companies, raw material manufacturers and food, beverageand agricultural companies.

 

·                  *BioSpin.* The operations of this segment includethe design, manufacture and distribution of enabling life science tools basedon its core technology, magnetic resonance, as well as the manufacturing anddevelopment of low temperature superconducting and high temperaturesuperconducting wires for use in advanced magnet technology and in energyapplications. Typical customers of the BioSpin segment include pharmaceuticaland biotechnology companies, academic institutions and government agencies.

 

**FinancialOverview**

 

For the three monthsended March 31, 2009, our revenue decreased by $7.8 million, or 3.3%, to$230.5 million, compared to $238.3 million for the comparable period in 2008.Included in this change in revenue is a reduction of 

 

21

----

Table of Contents

 

approximately $18.6million from the impact of foreign exchange due to the strengthening of U.S.Dollar versus the Euro and other foreign currencies. Excluding the effect offoreign exchange, revenue increased by $10.8 million, or 4.5%. The increase inrevenue, excluding the effect of foreign exchange, is attributable to anincrease in system and wire revenue in the BioSpin segment and is relatedprimarily to increased sales volume of magnetic resonance systems. The increasein revenue from the BioSpin segment was offset, in part, by lower sales in theBioScience segment attributable primarily to certain industrial products andCBRN detection systems. The decrease in revenue from certain industrial productsand CBRN detection systems were offset, in part, by an increase in sales of massspectrometry systems. The mix of products sold in the BioScience segment is primarilythe result of lower demand from industrial and pharmaceutical customers offsetby increased demand from academic and government customers.

 

Income from operationsfor the three months ended March 31, 2009 was $14.3 million, resulting inan operating margin of 6.2%, compared to income from operations of $15.8million, resulting in an operating margin of 6.6%, for the comparable period in2008. Operating margins in the first quarter of 2008 included $5.8 million ofacquisition-related charges incurred in connection with the acquisition ofBruker BioSpin. Excluding the effect of these acquisition-related charges,income from operations decreased by $7.3 million as a result of lower grossprofits partially offset by a decrease in operating expenses.

 

Our gross profit margin forthe first quarter of 2009 was 44.6%, compared to 47.8% for the comparableperiod in 2008. Lower gross margins were driven in part by lower revenues, butwere also negatively impacted by the mix of products sold, particularly thedecrease in sales of CBRN detection systems described above. In addition,pricing pressure continues to be a factor with respect to certain productlines. The decrease in operating expenses is attributable to changes in foreigncurrency exchange rates and cost savings programs implemented in the secondhalf of 2008. We have started to realize the benefits of the cost cuttinginitiatives that we announced in 2008 and may realize additional savingsthroughout 2009. However, we are also investing in new growth opportunities.

 

During the three monthsended March 31, 2009, we recorded net gains on foreign currencytransactions of $1.3 million compared to net losses of $12.2 million for thecomparable period in 2008. Foreign exchange losses incurred in the first threemonths of 2008 were driven by the re-measurement of certain foreign currencydenominated assets, principally cash, inter-company receivables and ashort-term inter-company loan into the functional currency of the affectedentities. In the last twelve months, we have implemented programs designed toreduce our exposure to changes in foreign currency exchange rates and areconsidering additional actions, including a transactional hedging program.

 

We incurred approximately$2.3 million of interest expense during the three months ended March 31,2009 compared to $2.7 million for the comparable period in 2008. Of the totalinterest expense incurred during the three months ended March 31, 2009,approximately $1.9 million related to a credit facility that we entered intoduring the first quarter of 2008. We initially borrowed $351.0 million underthis credit facility in order to finance the acquisition of Bruker BioSpin. Inthe first quarter of 2009, we repaid approximately $17.5 million of the amountsoutstanding under this credit agreement and from the inception of this creditagreement we have reduced the net amount outstanding by approximately $173.0million.

 

Our effective tax ratefor the three months ended March 31, 2009 was 40.3%, compared to 116.7%for the comparable period in 2008. The change in our effective tax rate relatesprimarily to the amount and mix of income and taxes outside the U.S. However,in addition to the amount and mix of income and taxes outside the U.S., ourincome tax provision in the first quarter of 2008 was negatively impacted byacquisition-related charges and foreign exchange losses that did not result insignificant tax benefits because they were incurred primarily either in theU.S. or in foreign locations with relatively low tax rates.

 

Our net incomeattributable to the shareholders of Bruker Corporation for the three monthsended March 31, 2009 was $8.4 million, or $0.05 per diluted share,compared to a net loss of $(0.8) million, or $(0.00) per diluted share, for thecomparable period in 2008.

 

22

----

Table of Contents

 

**CRITICALACCOUNTING POLICIES**

 

This discussion andanalysis of our financial condition and results of operations is based upon ourunaudited condensed consolidated financial statements, which have been preparedin accordance with accounting principles generally accepted in the UnitedStates of America. The preparation of these financial statements requires thatwe make estimates and assumptions that affect the reported amounts of assetsand liabilities and the disclosure of contingent assets and liabilities at thedate of the financial statements and reported amounts of revenues and expensesduring the reporting period. On an ongoing basis, management evaluates itsestimates and judgments, including those related to revenue recognition, incometaxes, allowance for doubtful accounts, inventories, goodwill, other intangibleassets and long-lived assets, warranty costs and derivative financialinstruments. We base our estimates and judgments on historical experience,current market and economic conditions, industry trends and other assumptionsthat we believe are reasonable and form the basis for making judgments aboutthe carrying value of assets and liabilities that are not readily apparent fromother sources. Actual results could differ from these estimates.

 

We believe the followingcritical accounting policies to be both those most important to the portrayalof our financial position and results of operations and those that require themost subjective judgment.

 

*Revenuerecognition.*Werecognize revenue from system sales when persuasive evidence of an arrangementexists, the price is fixed or determinable, title and risk of loss has beentransferred to the customer and collectibility of the resulting receivable isreasonably assured. Title and risk of loss are generally transferred to thecustomer upon receipt of a signed customer acceptance form for a system thathas been shipped, installed, and for which the customer has been trained. As aresult, the timing of customer acceptance or readiness could cause our reportedrevenues to differ materially from expectations. When products are sold throughan independent distributor or a strategic distribution partner, who assumesresponsibility for installation, we recognize the system sale when the producthas been shipped and title and risk of loss have been transferred to the distributor.Our distributors do not have price protection rights or rights of return;however, our products are typically warranted to be free from defect for aperiod of one year. Revenue is deferred until cash is received when asignificant portion of the fee is due over one year after delivery, installationand acceptance of a system. For arrangements with multiple elements, werecognize revenue for each element based on the fair value of the element,provided all other criteria for revenue recognition have been met. The fairvalue for each element provided in multiple element arrangements is typicallydetermined by referencing historical pricing policies when the element is soldseparately. Changes in our ability to establish the fair value for each elementin multiple element arrangements could affect the timing of revenuerecognition. Revenue from accessories and parts is recognized upon shipment andservice revenue is recognized as the services are performed. Grant revenue isrecognized when we complete the services required under the grant.

 

*Incometaxes.* Weestimate the degree to which tax assets and loss carryforwards will result in abenefit based on expected profitability by tax jurisdiction, and we provide avaluation allowance for tax assets and loss carryforwards that we believe willmore likely than not go unused. If it becomes more likely than not that a taxasset or loss carryforward will be used for which a reserve has been provided,we reverse the related valuation allowance. If our actual future taxable incomeby tax jurisdiction differs from estimates, additional allowances or reversalsof reserves may be necessary.

 

*Allowancefor doubtful accounts.* We maintain allowances for doubtful accounts for estimated lossesresulting from the inability of our customers to pay amounts due. If the financialcondition of our customers were to deteriorate, reducing their ability to makepayments, additional allowances would be required, resulting in a charge tooperations.

 

*Inventories.* Inventories are stated at the lower ofcost or market, with costs determined by the first-in, first-out method for amajority of subsidiaries and by average cost for certain internationalsubsidiaries. We record provisions to account for excess and obsolete inventoryto reflect the expected non-saleable or non-refundable inventory based on anevaluation of slow moving products. If ultimate usage or demand variessignificantly from expected usage or demand, additional write-downs may berequired, resulting in additional charges to operations.

 

*Goodwill,other intangible assets and other long-lived assets.* We evaluate whether goodwill andindefinite lived intangible assets are impaired annually and when events occuror circumstances change. Goodwill is impaired when the fair value of areporting unit is less than its carrying amount. Fair value is determined usingdiscounted 

 

23

----

Table of Contents

 

future cash flows. Wealso review long-lived intangible assets and other assets when indication ofpotential impairment exists, such as a significant reduction in undiscountedcash flows associated with the assets. Should the fair value of our long-livedassets decline because of reduced operating performance, market declines, orother indicators of impairment, a charge to operations for impairment may benecessary.

 

*Warrantycosts.* Wenormally provide a one year parts and labor warranty with the purchase ofequipment. The anticipated cost for this warranty is accrued upon recognitionof the sale based on historical warranty rates and our assumptions of futurewarranty claims. The warranty accrual is included as a current liability on theunaudited condensed consolidated balance sheets. Although our products undergo qualityassurance and testing procedures throughout the production process, ourwarranty obligation is affected by product failure rates, material usage andservice delivery costs incurred in correcting a product failure. Although ouractual warranty costs have historically been consistent with expectations, tothe extent warranty claim activity or costs associated with servicing thoseclaims differ from our estimates, revisions to the warranty accrual may berequired.

 

*Derivativefinancial instruments.* All derivative instruments are recorded as other assets or otherliabilities at fair value, which is calculated as an estimate of the futurecash flows, and subsequent changes in a derivative’s fair value are recognizedin income, unless specific hedge accounting criteria are met. Changes in thefair value of a derivative that is highly effective and designated as a cashflow hedge are recognized in accumulated other comprehensive income until theforecasted transaction occurs or it becomes probable that the forecastedtransaction will not occur. We perform an assessment at the inception of thehedge and on a quarterly basis thereafter, to determine whether our derivativesare highly effective in offsetting changes in the value of the hedged items.Any changes in the fair value resulting from hedge ineffectiveness isimmediately recognized as income or expense.

 

**RESULTSOF OPERATIONS**

 

***Three Months Ended March 31, 2009 Compared to the ThreeMonths Ended March 31, 2008***

 

***Consolidated Results***

 

The following table presentsour results for the three months ended March 31, 2009 and 2008 (dollars inmillions):

 

24

----

Table of Contents

 
| ** **                                                                                               | ** ** | **Three Months Ended** | ** ** |
|----------------------------------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                                               | ** ** | **March 31,**     | ** ** |
| ** **                                                                                               | ** ** | **2009**               | ** ** | **2008** | ** ** |
| Product revenue                                                                                          |       | $                      | 202.2      |   | $ | 208.3 |   |
| Service revenue                                                                                          |       | 26.9                   |       | 28.7 |   |
| Other revenue                                                                                            |       | 1.4                    |       | 1.3 |   |
| Total revenue                                                                                            |       | 230.5                  |       | 238.3 |   |
|                                                                                                     |       |                   |       |   |   |
| Cost of product  revenue                                                                                 |       | 111.7                  |       | 105.2 |   |
| Cost of service  revenue                                                                                 |       | 16.1                   |       | 19.1 |   |
| Total cost of revenue                                                                                    |       | 127.8                  |       | 124.3 |   |
| Gross profit                                                                                             |       | 102.7                  |       | 114.0 |   |
|                                                                                                     |       |                   |       |   |   |
| Operating  expenses:                                                                                     |       |                   |       |   |   |
| Sales and  marketing                                                                                     |       | 42.6                   |       | 44.4 |   |
| General and  administrative                                                                              |       | 16.7                   |       | 16.8 |   |
| Research and  development                                                                                |       | 29.1                   |       | 31.2 |   |
| Acquisition-related  charges                                                                             |       | —                 |       | 5.8 |   |
| Total operating  expenses                                                                                |       | 88.4                   |       | 98.2 |   |
| Operating income                                                                                         |       | 14.3                   |       | 15.8 |   |
|                                                                                                     |       |                   |       |   |   |
| Interest and  other income (expense), net                                                                |       | 0.1                    |       | (12.2 | ) |
| Income before  income tax provision and noncontrolling interest in consolidated subsidiaries             |       | 14.4                   |       | 3.6 |   |
| Income tax  provision                                                                                    |       | 5.8                    |       | 4.2 |   |
| Consolidated net  income (loss)                                                                          |       | 8.6                    |       | (0.6 | ) |
| Less: net income  attributable to noncontrolling interests                                               |       | 0.2                    |       | 0.2 |   |
| Net income  (loss) attributable to Bruker Corporation                                                    |       | $                      | 8.4        |   | $ | (0.8 | ) |
|                                                                                                     |       |                   |       |   |   |
| Net income  (loss) per common share attributable to Bruker Corporation shareholders -  basic and diluted |       | $                      | 0.05       |   | $ | (0.00 | ) |
|                                                                                                     |       |                   |       |   |   |
| Weighted average  common shares outstanding:                                                             |       |                   |       |   |   |
| Basic                                                                                                    |       | 163.3                  |       | 162.3 |   |
| Diluted                                                                                                  |       | 164.3                  |       | 162.3 |   |

 

***Revenue***

 

Our revenue decreased by$7.8 million, or 3.3%, to $230.5 million for the three months ended March 31,2009, compared to $238.3 million for the comparable period in 2008. Included inthis change in revenue is approximately $18.6 million from the impact offoreign exchange. Excluding the effect of foreign exchange, revenue increasedby 4.5%. The increase in revenue, excluding the effect of foreign exchange, isattributable to an increase in system and wire revenue in the BioSpin segmentand is related primarily to increased sales volume of magnetic resourcesystems. The increase in revenue from the BioSpin segment was offset, in part,by lower sales in the BioScience segment attributable primarily to X-ray andOES-spark products and CBRN detection systems. The decrease in revenue fromX-ray and OES-spark products and CBRN detection systems was offset, in part, byan increase in sales of mass spectrometry systems. The mix of products sold inthe BioScience segment is primarily the result of lower demand from industrialand pharmaceutical customers offset by increased demand from academic andgovernment customers.

 

25

----

Table of Contents

 

***Cost of Revenue***

 

Our cost of product andservice revenue for the three months ended March 31, 2009, was $127.8million, resulting in a gross profit margin of 44.6%, compared to cost ofproduct and service revenue of $124.3 million, resulting in a gross profitmargin of 47.8%, for the comparable period in 2008. Lower gross margins weredriven in part by lower revenues, but were also negatively impacted by the mixof products sold, particularly the decrease in sales of CBRN detection systems.In addition to changes in the mix of products sold, pricing pressure continuesto be a factor with respect to certain product lines.

 

***Sales and Marketing***

 

Our sales and marketingexpense for the three months ended March 31, 2009 decreased to $42.6million, or 18.6% of product and service revenue, from $44.4 million, or 18.7%of product and service revenue, for the comparable period in 2008. The decreasein sales and marketing expense is attributable primarily to changes in foreigncurrency exchange rates, primarily the Euro. Additionally, we have started torealize the benefits from certain cost cutting initiatives but the savings wereoffset by selling and marketing efforts associated with number of recentlyintroduced products.

 

***General and Administrative***

 

Our general andadministrative expense for the three months ended March 31, 2009 was $16.7million, or 7.3% of product and service revenue, and was essentially flatcompared with general and administrative expense of $16.8 million, or 7.1% ofproduct and service revenue, for the comparable period in 2008.

 

***Research and Development***

 

Our research anddevelopment expense for the three months ended March 31, 2009 decreased to$29.1 million, or 12.7% of product and service revenue, from $31.2 million, or13.2% of product and service revenue, for the comparable period in 2008. Thedecrease in research and development expenses is attributable primarily tochanges in foreign currency exchange rates, primarily the Euro, as a majorityof our research and development is performed in Europe. Additionally, we havestarted to realize the benefits from certain cost cutting initiatives but thesavings were offset by investments in a number of new products and featuresscheduled to be released in the next six to twelve months.

 

***Acquisition-Related Charges***

 

On December 3, 2007,we announced that we had entered into a definitive agreement to acquire all ofthe stock of Bruker BioSpin. The acquisition of Bruker BioSpin was approved byour shareholders on February 25, 2008 and was completed on February 26,2008. The acquisition represented a combination of companies under commoncontrol due to a majority of ownership of both Bruker Corporation and BrukerBioSpin by the same individuals and, as a result, transaction costs wereexpensed as incurred. There were no acquisition-related charges incurred duringthe three months ended March 31, 2009. During the three months ended March 31,2008, we incurred and expensed acquisition-related charges totaling $5.8million, which consisted primarily of investment banking fees, legal fees andaccounting fees.

 

***Interest and Other Income (Expense), Net***

 

Interest and other income(expense), net during the three months ended March 31, 2009 was $0.1million, compared to $(12.2) million for the comparable period of 2008.

 

During the three monthsended March 31, 2009, the major components within interest and otherincome (expense), net were realized and unrealized gains on foreign currencytransactions of $1.3 million and other income of $0.7 million offset, inpart, by net interest expense of $1.9 million. During the three monthsended March 31, 2008, the major component within interest and other income(expense), net, was realized and unrealized losses on foreign currencytransactions of $12.2 million, which resulted from the re-measurement ofcertain foreign currency denominated assets, principally cash, inter-companyreceivables and a short-term inter-company loan into the functional currency ofthe affected entities.

 

26

----

Table of Contents

 

***Income Tax Provision***

 

Our effective tax ratereflects our tax provision for non-U.S. entities only since no benefit wasrecognized for losses incurred in the U.S. We will maintain a full valuationallowance for our U.S. net operating losses until evidence exists that it ismore likely than not that the loss carryforward amounts will be utilized tooffset U.S. taxable income. Our tax rate may change over time as the amount andmix of income and taxes outside the U.S. changes. The effective tax rate iscalculated using our projected annual pre-tax income or loss and is affected bytax credits, the expected level of other tax benefits, and the impact ofchanges to the valuation allowance, as well as changes in the mix of ourpre-tax income and losses among jurisdictions with varying statutory tax ratesand credits.

 

The income tax provisionfor the three months ended March 31, 2009, was $5.8 million compared to anincome tax provision of $4.2 million for the three months ended March 31,2008, representing effective tax rates of 40.3% and 116.7%, respectively. Thechange in our effective tax rate relates primarily to the amount and mix ofincome and taxes outside the U.S. However, in addition to the amount and mix ofincome and taxes outside the U.S., our income tax provision in the firstquarter of 2008 was negatively impacted by acquisition-related charges andforeign exchange losses that did not result in significant tax benefits becausethey were incurred primarily either in the U.S. or in foreign locations withrelatively low tax rates.

 

***Net Income Attributable to NoncontrollingInterests***

 

Net income attributableto noncontrolling interests for the three months ended March 31, 2009 and March 31,2008 was $0.2 million, which represents the minority shareholders’proportionate share of the net income recorded by three majority-owned indirectsubsidiaries, InCoaTec GmbH and Bruker Baltic Ltd., which are in the BioSciencesegment, and Perch Solutions OY, which is in the BioSpin segment.

 

***Net Income (Loss) Attributable to BrukerCorporation***

 

Our net income for thethree months ended March 31, 2009, was $8.4 million, or $0.05 per dilutedshare, compared to a net loss of $(0.8) million, or $(0.00) per diluted sharefor the comparable period in 2008.

 

***Segment Results***

 

***Revenue***

 

The following tablepresents revenue, change in revenue and revenue growth by reportable segmentfor the three months ended March 31, 2009 and 2008 (dollars in millions):

 
| ** **       | ** ** | **2009** | ** **  | **2008** | ** ** | **Dollar Change** | ** ** | **Percentage  Change** | ** ** |
|------------------|------------|----------|-------------|----------|------------|-------------------|------------|------------------------|------------|
| BioScience       |       | $        | 126.6       |     | $          | 142.6             |       | $                      | (16.0      | ) | (11.2 | )% |
| BioSpin          |       | 114.6    |        | 112.1    |       | 2.5               |       | 2.2                    | %          |
| Eliminations (a) |       | (10.7    | )           | (16.4    | )          | 5.7               |       |                   |       |
|             |       | $        |  230.5 |     | $          | 238.3             |       | $                      | (7.8       | ) | (3.3 | )% |

 

----

(a) Representsproduct and service revenue between reportable segments.

 

***BioScience Segment Revenues***

 

BioScience segmentrevenue decreased by $16.0 million, or 11.2%, to $126.6 million forthe three months ended March 31, 2009, compared to $142.6 million forthe comparable period in 2008. Included in this change in revenue isapproximately $12.6 million from the impact of foreign exchange. Excludingthe effect of foreign exchange, revenue decreased by 2.4%. The decrease inrevenue, excluding the effect of foreign exchange, is attributable to X-ray andOES-spark products and CBRN detection systems. The decrease in revenue fromthese product lines was offset, in part, by an increase in sales of massspectrometry systems. The mix of products sold in the BioScience segment is primarilythe result of lower demand from industrial and pharmaceutical customers offsetby increased demand from academic and government customers.

 

27

----

Table of Contents

 

System revenue, othersystem revenue and aftermarket revenue as a percentage of total BioSciencesegment revenue were as follows during the three months ended March 31,2009 and 2008 (dollars in millions):

 
| ** **            | ** ** | **2009**    | ** ** | **2008**                            | ** ** |
|-----------------------|------------|-------------|------------|-------------------------------------|------------|
| ** **            | ** ** | **Revenue** | ** ** | **Percentage of  Segment  Revenue** | ** ** | **Revenue** | ** ** | **Percentage of  Segment  Revenue** | ** ** |
| System revenue        |       | $           | 100.7      |                                | 79.5       | % | $ | 115.2 |   | 80.8 | % |
| Other system  revenue |       | 1.9         |       | 1.5                                 | %          | 1.8 |   | 1.2 | % |
| Aftermarket  revenue  |       | 24.0        |       | 19.0                                | %          | 25.6 |   | 18.0 | % |
| Total revenue         |       | $           | 126.6      |                                | 100.0      | % | $ | 142.6 |   | 100.0 | % |

 

System revenues in theBioScience segment include X-ray systems, mass spectrometry systems, CBRNdetection systems and molecular spectroscopy systems. Other system revenues inthe BioScience segment relate primarily to the distribution of products notmanufactured by the BioScience segment. Aftermarket revenues in the BioSciencesegment include accessory sales, consumables, training and services.

 

***BioSpin Segment Revenues***

 

BioSpin segment revenueincreased by $2.5 million, or 2.2%, to $114.6 million for the threemonths ended March 31, 2009, compared to $112.1 million for thecomparable period in 2008. Included in this change in revenue is approximately$6.0 million from the impact of foreign exchange. Excluding the effect offoreign exchange, revenue increased by 7.6%. The increase in revenue, excludingthe effect of foreign exchange, is attributable to an increase in system andwire revenue in the BioSpin segment and is related primarily to increased salesvolume of magnetic resonance systems. Because of the nature of the magneticresonance products sold by the BioSpin segment, particularly the complexity ofthe instruments coupled with relatively low volumes and high selling prices, BioSpinsegment revenues are generally subject to a high degree of volatility whencomparing any two quarters, whether they be year-over-year or sequential.

 

System and wire revenue,other system revenue and aftermarket revenue as a percentage of total BioSpinsegment revenue were as follows during the three months ended March 31,2009 and 2008 (dollars in millions):

 
| ** **               | ** ** | **2009**    | ** ** | **2008**                            | ** ** |
|--------------------------|------------|-------------|------------|-------------------------------------|------------|
| ** **               | ** ** | **Revenue** | ** ** | **Percentage of  Segment  Revenue** | ** ** | **Revenue** | ** ** | **Percentage of  Segment  Revenue** | ** ** |
| System and wire  revenue |       | $           | 101.8      |                                | 88.8       | % | $ | 98.4 |   | 87.8 | % |
| Other system  revenue    |       | 1.0         |       | 0.9                                 | %          | 1.1 |   | 1.0 | % |
| Aftermarket  revenue     |       | 11.8        |       | 10.3                                | %          | 12.6 |   | 11.2 | % |
| Total revenue            |       | $           | 114.6      |                                | 100.0      | % | $ | 112.1 |   | 100.0 | % |

 

System and wire revenuesin the BioSpin segment include nuclear magnetic resonance systems, magneticresonance imaging systems, electron paramagnetic resonance systems, Minispecsystems, power supplies and our low temperature superconducting and hightemperature superconducting wire business. Other system revenues in the BioSpinsegment relate primarily to the distribution of products not manufactured bythe BioSpin segment. Aftermarket revenues in the BioSpin segment includeaccessory sales, consumables, training and services.

 

***Income from Operations***

 

The following tablepresents income from operations and operating margins on revenue by reportablesegment for the three months ended March 31, 2009 and 2008 (dollars inmillions):

 

28

----

Table of Contents

 
| ** **                             | ** ** | **2009**              | ** ** | **2008**                            | ** ** |
|----------------------------------------|------------|-----------------------|------------|-------------------------------------|------------|
| ** **                             | ** ** | **Operating  Income** | ** ** | **Percentage of  Segment  Revenue** | ** ** | **Operating  Income** | ** ** | **Percentage of  Segment  Revenue** | ** ** |
| BioScience                             |       | $                     | 2.2        |                                | 1.7        | % | $ | 11.7 |   | 8.2 | % |
| BioSpin                                |       | 15.7                  |       | 13.7                                | %          | 10.0 |   | 8.9 | % |
| Corporate,  eliminations and other (a) |       | (3.6                  | )          |                                |       | (5.9 | ) |   |   |
| Total operating  income                |       | $                     | 14.3       |                                | 6.2        | % | $ | 15.8 |   | 6.6 | % |

 

----

(a) Representscorporate costs not allocated to the reportable segments.

 

BioScience segment incomefrom operations for the three months ended March 31, 2009 was$2.2 million, resulting in an operating margin of 1.7%, compared to incomefrom operations of $11.7 million, resulting in an operating margin of8.2%, for the comparable period in 2008.

 

Income from operations inthe BioScience segment decreased as a result of the lower revenues describedabove and lower gross margins as a percentage of revenue. Lower gross marginswere driven primarily by the mix of products sold, particularly the decrease insales of CBRN detection systems. In addition to product mix, pricing pressurein certain product lines continues to have an impact on gross margins.Operating expenses in the BioScience segment were essentially flat in the firstquarter of 2009 in comparison to the first quarter of 2008 as savings from costcutting initiatives were largely offset by investments in new productdevelopment.

 

BioSpin segment incomefrom operations for the three months ended March 31, 2009 was$15.7 million, resulting in an operating margin of 13.7%, compared toincome from operations of $10.0 million, resulting in an operating marginof 8.9%, for the comparable period in 2008.

 

BioSpin segment incomefrom operations increased as a result of lower operating expenses as apercentage of revenue. Gross margin as a percentage of revenue was essentiallyflat when comparing the three months ended March 31, 2009 to the threemonths ended March 31, 2008. The decreases in operating expenses isattributable primarily to changes in foreign currency exchange rates, primarilythe Euro, as a majority of our sales and marketing efforts and research anddevelopment is performed in Europe. Additionally, the BioSpin segment hasstarted to realize the benefits from certain cost cutting initiatives.

 

**LIQUIDITYAND CAPITAL RESOURCES**

 

We currently anticipatethat our existing cash and credit facilities will be sufficient to support ouroperating and investing needs for at least the next twelve months, but thisdepends on our profitability and our ability to manage working capitalrequirements. Our future cash requirements will also be affected byacquisitions that we may make in the future. Historically, we have financed ourgrowth through a combination of debt financings and issuances of common stock.In the future, there can be no assurances that additional financingalternatives will be available to us if required, or if available, will beobtained on terms favorable to us.

 

During the three monthsended March 31, 2009, net cash provided by operating activities was$13.1 million, resulting primarily from $8.6 million of net income and$6.8 million of depreciation and amortization. During the three months ended March 31,2008, net cash provided by operating activities was $22.3 million,resulting primarily from changes in working capital.

 

During the three monthsended March 31, 2009, net cash used by investing activities was$4.8 million, compared to net cash used by investing activities of$31.2 million during the three months ended March 31, 2008. Cash usedby investing activities during the three months ended March 31, 2009 wasattributable primarily to $3.9 million of capital expenditures and$0.7 million used for acquisitions. Cash used by investing activitiesduring the three months ended March 31, 2008 was attributable primarily to$13.4 million of capital expenditures and a $10.7 million change inrestricted cash. The decrease in capital expenditures during the three monthsended March 31, 2009 compared to 2008 related primarily to theexpansion of our facility in Ettlingen, Germany, which was completed in thethird quarter of 2008.

 

29

----

Table of Contents

 

During the three monthsended March 31, 2009, net cash used by financing activities was$17.6 million, compared to net cash used by financing activities of$53.4 million during the three months ended March 31, 2008. Cash usedby financing activities during the three months ended March 31, 2009 wasattributable to $17.6 million of net debt repayments under variouslong-term and short-term arrangements. Cash used by financing activities duringthe three months ended March 31, 2008 was attributable to $386.0 millionpaid to certain shareholders of Bruker BioSpin in connection with theacquisition and $23.4 million of withholding taxes paid in connection with adividend declared by Bruker BioSpin prior to the acquisition. These uses wereoffset, in part, by $358.9 million of net borrowings related primarily to theCredit Agreement.

 

At March 31, 2009,we had outstanding debt totaling $203.6 million consisting of $178.1 millionoutstanding under the Credit Agreement, including $142.5 millionoutstanding under a term loan and $35.6 million under revolving loans,$14.7 million outstanding under other long-term debt arrangements,$6.0 million outstanding under other revolving lines of credit and$4.8 million under capital lease obligations. At March 31, 2009 weclassified $30.6 million of the $35.6 million borrowed under therevolving credit line of the Credit Agreement as long-term because we do notexpect to repay this amount in the next twelve months. At December 31,2008, we had outstanding debt totaling $223.8 million consisting of$196.5 million outstanding under the Credit Agreement, including$144.4 million drawn on a term loan and $52.1 million under revolvingloans, $15.8 million outstanding under other long-term debt arrangements,$6.2 million outstanding under other revolving lines of credit and$5.3 million under capital lease obligations.

 

On February 26,2008, we completed our acquisition of Bruker BioSpin for $914.0 million.The acquisition of Bruker BioSpin was financed with 57,544,872 shares ofunregistered common stock valued at $526.0 million based on the trailing10-day trading average closing price of $9.14 per share as of two days prior tothe signing of the transaction agreements, $351.0 million of cash obtainedunder a new credit facility, which we refer to as the Credit Agreement, and thebalance with cash on hand. The Credit Agreement, which is with a syndication oflenders, provides for a revolving credit line with a maximum commitment of$230.0 million and a term loan facility of $150.0 million. Theoutstanding principal under the term loan is payable in quarterly installmentsthrough December 2012. Borrowings under the Credit Agreement bearinterest, at our option, at either (i) the higher of the prime rate or thefederal funds rate plus 0.50%, or (ii) adjusted LIBOR, plus marginsranging from 0.40% to 1.25% and a facility fee ranging from 0.10% to 0.20%. Asof March 31, 2009, the weighted average interest rate of borrowings underthe term facility of the Credit Agreement was approximately 3.1%.

 

Borrowings under theCredit Agreement are secured by the pledge to the banks of 100% of the capitalstock of each of our wholly-owned domestic subsidiaries and 65% of the capitalstock of certain of our wholly-owned direct or indirect foreign subsidiaries.The Credit Agreement also requires that we maintain certain financial ratiosrelated to maximum leverage and minimum interest coverage, as defined in theCredit Agreement. In addition to the financial ratios, the Credit Agreementrestricts, among other things, our ability to do the following: make certainpayments; incur additional debt; incur certain liens; make certain investments,including derivative agreements; merge, consolidate, sell or transfer all orsubstantially all of our assets; and enter into certain transactions withaffiliates. As of March 31, 2009, the latest measurement date, we were incompliance with the covenants of the Credit Agreement.

 

Other long-term debtarrangements at March 31, 2009 include both collateralized anduncollateralized arrangements with various financial institutions in Germanyand Japan and are at fixed and variable interest rates ranging from 2.0% to8.0% at March 31, 2009. The term of these arrangements are through variousdates between 2010 and 2013.

 

Other revolving loans arewith various financial institutions primarily in the United States, Germany,Switzerland, Japan and France. The following is a summary of the maximumcommitments and net amounts available to the Company under revolving loans asof March 31, 2009 (in millions):

 

30

----

Table of Contents

 
| ** **             | ** ** | **Weighted  Average  Interest Rate** | ** ** | **Total Amount  Committed by  Lenders** | ** ** | **Outstanding  Borrowings** | ** ** | **Outstanding  Letters of  Credit** | ** ** | **Total Amount  Available** | ** ** |
|------------------------|------------|--------------------------------------|------------|-----------------------------------------|------------|-----------------------------|------------|-------------------------------------|------------|-----------------------------|------------|
| Credit Agreement       |       | 2.3                                  | %          | $                                       | 230.0      |                        | $          | 35.6                                |       | $                           | 1.0        |   | $ | 193.4 |   |
| Other revolving  loans |       | 3.0                                  | %          | 64.8                                    |       | 6.0                         |       | 50.2                                |       | 8.6                         |       |
| Total revolving  loans |       | 2.4                                  | %          | $                                       | 294.8      |                        | $          | 41.6                                |       | $                           | 51.2       |   | $ | 202.0 |   |

 

As of March 31,2009, we have approximately $10.2 million of net operating loss carryforwardsavailable to reduce future U.S. taxable income. These losses have variousexpiration dates through 2028. The Company also has approximately $45.3 millionof German Trade Tax net operating losses that are carried forward indefinitely.We also have U.S. tax credits of approximately $19.4 million available tooffset future tax liabilities that expire at various dates. These creditsinclude foreign tax credits of $17.6 million expiring in various years through2018 and research and development tax credits of $1.8 million expiring atvarious dates through 2025. These operating losses and tax credit carryforwardsmay be subject to limitations under provisions of the Internal Revenue Code.

 

The following tablesummarizes maturities for our significant financial obligations as of March 31,2009 (in millions):

 
| **Contractual Obligations**                | ** ** | **Total** | ** ** | **Less than 1  Year** | ** ** | **1-3 Years** | ** ** | **4-5 Years** | ** ** | **More than 5  Years** | ** ** |
|--------------------------------------------|------------|-----------|------------|-----------------------|------------|---------------|------------|---------------|------------|------------------------|------------|
| Revolving lines  of credit                 |       | $         | 41.6       |                  | $          | 11.0          |       | $             | —     |                   | $          | 30.6 |   | $ | — |   |
| Long-term debt,  including current portion |       | 162.0     |       | 19.9                  |       | 60.0          |       | 80.5          |       | 1.6                    |       |
| Uncertain tax  contingencies               |       | 21.3      |       | —                |       | 21.3          |       | —        |       | —                 |       |
|                                            |            |           |            |                       |            |               |            |               |            |                        |            |  |  |  |  |  |

 

Uncertain tax contingenciesare positions taken or expected to be taken on an income tax return that mayresult in additional payments to tax authorities. The total amount of uncertaintax contingencies is included in the “1-3 Years” column as we are not able toreasonably estimate the timing of potential future payments. If a tax authorityagrees with the tax position taken or expected to be taken or the applicablestatute of limitations expires, then additional payments will not be necessary.

 

**RECENTACCOUNTING PRONOUNCEMENTS**

 

In December 2008,the Financial Accounting Standards Board (“FASB”) issued Staff Position No. 132(R)-1,*Employers’ Disclosures about PostretirementBenefit Plan Assets*(“FSP 132(R)-1”). FSP 132(R)-1 requires detaileddisclosures regarding the investment strategies, fair value measurements, andconcentrations of risk of plan assets of a defined benefit pension or otherpostretirement plan. FSP 132(R)-1 is effective for fiscal years ending after December 15,2009 and will be applied prospectively. We are currently assessing the impactthat FSP 132(R)-1 will have on our results of operations and financialposition.

 

In March 2008, theFASB issued Statement of Financial Accounting Standards (“SFAS”) No. 161,*Disclosures about Derivative Instruments and HedgingActivities—an amendment of FASB Statement No. 133*(“SFAS No. 161”).SFAS No. 161 requires enhanced disclosures about an entity’s derivativeand hedging activities and, thereby, improves the transparency of financialreporting. We adopted SFAS No. 161 as of January 1, 2009. The adoption ofSFAS No. 161 did not have a material impact on our results of operations,financial position or cash flows.

 

In December 2007,the FASB issued SFAS No. 160, *NoncontrollingInterests in Consolidated Financial Statements—An Amendment of ARB No. 51*(“SFAS No. 160”). This statement establishes new accounting and reportingstandards for the minority interest in a subsidiary and the deconsolidation ofa subsidiary. We adopted SFAS No. 160 as of January 1, 2009. The adoptionof SFAS No. 160 did not have a material impact on our results ofoperations, financial position or cash flows.

 

In September 2006,the FASB issued SFAS No. 157, *FairValue Measurements* (“SFAS No. 157”),which is effective for fiscal years beginning after November 15, 2007. Weadopted SFAS No. 157 as of January 1, 2008. The adoption of SFAS No. 157did not have a material impact on our financial position, results of operationsor cash flows. In April 2009, the FASB issued FSP No. SFAS 157-4,*Determining Fair Value When the Volume and Level ofActivity for the Asset or Liability Have Significantly Decreased andIdentifying Transactions That Are Not*

 

31

----

Table of Contents

 

*Orderly* (FSP SFAS No. 157-4).  FSP SFAS No. 157-4affirms that the objective of fair value when the market for an asset is notactive is the price that would be received to sell the asset in an orderlytransaction, and clarifies and includes additional factors for determiningwhether there has been a significant decrease in market activity for an assetwhen the market for that asset is not active. FSP SFAS No. 157-4 iseffective for interim and annual reporting periods ending after June 15,2009. Adoption of this position is not expected to have a material impact onour financial position, results of operations or cash flows.

 
| **ITEM  3.** | **QUANTITATIVE  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK** |
|--------------|-----------------------------------------------------------------|

 

We are potentiallyexposed to market risks associated with changes in foreign exchange rates andinterest rates. We selectively use financial instruments to reduce these risks.All transactions related to risk management techniques are authorized andexecuted pursuant to our policies and procedures. Analytical techniques used tomanage and monitor foreign exchange and interest rate risk include marketvaluations and sensitivity analysis.

 

***Impact of Foreign Currencies***

 

We generate a substantialportion of our revenues in international markets, principally Europe and Japan,which subjects our operations to the exposure of exchange rate fluctuations.The impact of currency exchange rate movement can be positive or negative inany period. Our costs related to sales in foreign currencies are largelydenominated in the same respective currencies, limiting our transaction riskexposure. However, for sales not denominated in U.S. Dollars, if there is anincrease in the rate at which a foreign currency is exchanged for U.S. Dollars,it will require more of the foreign currency to equal a specified amount ofU.S. Dollars than before the rate increase. In such cases, if we price ourproducts in the foreign currency, we will receive less in U.S. Dollars than wedid before the rate increase went into effect. If we price our products in U.S.Dollars and competitors price their products in local currency, an increase inthe relative strength of the U.S. Dollar could result in our prices not beingcompetitive in a market where business is transacted in the local currency.

 

Our foreign exchangegains (losses), net were $1.3 million and $(12.2) million for the threemonths ended March 31, 2009 and 2008, respectively. From time to time, wehave entered into foreign currency contracts in order to minimize the volatilitythat fluctuations in exchange rates have on our cash flows related to purchasesand sales denominated in foreign currencies. We will continue to evaluate ourcurrency risks and in the future may utilize foreign currency contracts morefrequently as part of a transactional hedging program. At March 31, 2009,we had one outstanding forward contract involving the purchase of 3.7 millionEuros (approximately $4.9 million at March 31, 2009) in exchange for 463.0million Japanese Yen (approximately $4.6 million at March 31, 2009). Weentered into this contract in connection with a large order from a customer inJapan.

 

***Impact of Interest Rates***

 

We regularly investexcess cash in short-term investments that are subject to changes in interestrates. We believe that the market risk arising from holding these financialinstruments is minimal.

 

Our exposure related toadverse movements in interest rates is derived primarily from outstandingfloating rate debt instruments that are indexed to short-term market rates. Ourobjective in managing our exposure to interest rates is to decrease thevolatility that changes in interest rates might have on our earnings and cashflows. To achieve this objective we entered into interest rate swaps and crosscurrency rate swaps in order to minimize the volatility that changes ininterest rates might have on earnings and cash flows. A 10% increase ordecrease in the average cost of our variable rate debt would not result in amaterial change in pre-tax interest expense.

 

In April 2008, weentered into an interest rate swap arrangement to pay a fixed rate ofapproximately 3.8% and receive a variable rate based on three month LIBORthrough December 31, 2012. The initial notional amount of this interestswap was $90.0 million and amortizes in proportion to the term debtcomponent of our Credit Agreement. At March 31, 2009, the outstandingnotional amount of this swap was $85.5 million. We have determined that thisswap is an effective hedge of the variability of cash flows of the interestpayments.

 

32

----

Table of Contents

 

***Inflation***

 

We do not believeinflation had a material impact on our business or operating results during anyof the periods presented.

 
| **ITEM  4.** | **CONTROLS  AND PROCEDURES** |
|--------------|------------------------------|

 

We have establisheddisclosure controls and procedures that are designed to ensure that materialinformation relating to us, including our consolidated subsidiaries, is madeknown to our Chief Executive Officer (principal executive officer) and ChiefFinancial Officer (principal financial officer) by others within ourorganization. Under the supervision and with the participation of ourmanagement, including our Chief Executive Officer and Chief Financial Officer,we conducted an evaluation of the effectiveness of our disclosure controls andprocedures as of March 31, 2009. Based on this evaluation, our ChiefExecutive Officer and Chief Financial Officer concluded that our disclosurecontrols and procedures were effective, as of March 31, 2009, to ensurethat the information required to be disclosed by us in the reports that we fileor submit under the Securities Exchange Act of 1934 is recorded, processed,summarized and reported within the time periods specified in the SEC’s rules andforms.

 

There were no changes inour internal control over financial reporting that occurred during the quarterended March 31, 2009 that materially affected, or are reasonably likely toaffect, our internal control over financial reporting.

 

33

----

Table of Contents

 
| **PART II** | **OTHER  INFORMATION** |
|------------------|------------------------|
| ** **       | ** **             |
| **ITEM  1.**     | **LEGAL  PROCEEDINGS** |

 

Except as set forthbelow, there have been no material changes to the legal proceedings disclosedin Part I, “Item 3. Legal Proceedings” in our Annual Report on Form 10-Kfor the year ended December 31, 2008.

 

As previously reported, aformer employee of Bruker BioSpin Corporation contacted the Securities andExchange Commission during 2008 in connection with a claim this employeeseparately brought regarding violation of Section 806 of the Sarbanes-OxleyAct. The SEC first contacted counsel for the Company in early 2008 regardingthis matter and was provided various information regarding the matter at thattime. In March 2009, the SEC contacted counsel for the Company to request someadditional information regarding this matter. The Company is in the process ofproviding this information and intends to cooperate fully with the SECregarding this matter. As previously reported, the Company strongly denies theallegations made by this former employee.

 
| **ITEM  1A.** | **RISK  FACTORS** |
|---------------|-------------------|

 

In addition to the otherinformation set forth in this report, you should carefully consider the factorsdiscussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-Kfor the year ended December 31, 2008, which could materially affect ourbusiness, financial condition or future results. The risks described in thisreport and in our Annual Report on Form 10-K are not the only risks facingour Company. Additional risks and uncertainties not currently known to us orthat we currently deem to be immaterial also may materially adversely affect ourbusiness, financial condition and/or operating results.

 

There have been nomaterial changes to the risk factors previously disclosed in our Annual Reporton Form 10-K for the fiscal year ended December 31, 2008.

 
| **ITEM  2.** | **UNREGISTERED  SALES OF EQUITY SECURITIES AND USE OF PROCEEDS** |
|--------------|------------------------------------------------------------------|

 

The following table setsforth all purchases made by or on behalf of the Company or any “affiliatedpurchaser,” as defined in Rule 10b-18(a)(3) under the Exchange Act,of shares of our common stock during each month in the first quarter of 2009.

 
| **Period**                                | ** ** | **Total Number of  Shares Purchased** | ** ** | **Average Price  Paid per Share** | ** ** | **Total Number of  Shares Purchased  as Part of  Publicly  Announced Plans  or Programs** | ** ** | **Maximum  Number of Shares  that May Yet Be  Purchased Under  the Plans or  Programs** | ** ** |
|-------------------------------------------|------------|---------------------------------------|------------|-----------------------------------|------------|------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------|------------|
| January 1 -  January 31, 2009   |       | —                                |       | $                                 | —     |                                                                                           | —     |                                                                                         | —     |   |
| February 1  - February 28, 2009 |       | —                                |       | —                            |       | —                                                                                         |       | —                                                                                       |       |
| March 1 -  March 31, 2009       |       | 500,000                               |       | 4.05                              |       |                                                                                           |       |                                                                                         |       |
|                                      |       | 500,000                               |       | $                                 | 4.05       |                                                                                           | —     |                                                                                         | —     |   |

 

All shares repurchasedwere open-market purchases made by the Company’s Chief Executive Officer, wereeffected in accordance with the safe harbor provisions of Rule 10b-18 ofthe Exchange Act and were previously disclosed on Forms 4 filed with the U.S.Securities and Exchange Commission.

 
| **ITEM  3.** | **DEFAULTS  UPON SENIOR SECURITIES** |
|--------------|--------------------------------------|

 

None.

 
| **ITEM  4.** | **SUBMISSION  OF MATTERS TO A VOTE OF SECURITY HOLDERS** |
|--------------|----------------------------------------------------------|

 

None.

 

34

----

Table of Contents

 
| **ITEM  5.** | **OTHER  INFORMATION** |
|--------------|------------------------|

 

None.

 
| **ITEM  6.** | **EXHIBITS** |
|--------------|--------------|

 
| **Exhibit  No.** | ** ** | **Description**                                                                                                                                                                               |
|------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1             |       | Certification by Chief  Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of  2002(1)                                                                                  |
| 31.2             |       | Certification by Chief  Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of  2002(1)                                                                                  |
| 32.1             |       | Certification by Chief  Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002(2) |

 

----

(1) Filedherewith.

(2) Furnishedherewith.

 

35

----

Table of Contents

 

**SIGNATURES**

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned, thereuntoduly authorized.

 
|                    |   | BRUKER CORPORATION |
|-------------------------|--------|--------------------|
|                    |   |               |   |
| Date: May 11, 2009 |   | By:                | /s/ FRANK H. LAUKIEN,  PH.D. |
|                    |   |               | Frank H. Laukien, Ph.D.

President, Chief  Executive Officer and Chairman

(Principal Executive  Officer) |
|                    |   |               |   |
| Date: May 11, 2009 |   | By:                | /s/ WILLIAM J. KNIGHT |
|                    |   |               | William J. Knight

Chief Financial Officer

(Principal Financial  Officer) |

 

36

----